Prop 64 Will Not Destroy California’s Marijuana Growers: Opposition to Regulation Will

Jay Lauren

State regulations are coming, with or without Prop 64.

News sources have been reporting increased opposition from California growers toward Prop 64’s ballot measure to introduce recreational marijuana. We noted this, as well, when we sent a message in support of Prop 64, and received a large number of negative comments in response. As a result, we polled our audience, and the poll revealed less than 47% of people working within the industry today support the ballot measure. This stands in contrast to the mood of the general voting population – recent polls show nearly 60% of all CA voters support the ballot measure. What became clear as a result of our poll: if the industry was put in charge of deciding the future, the ballot measure on recreational marijuana in California would fail.
But we are not certain this lack of support is the result of a faulty ballot measure: many are simply opposed to any type of government regulation. A look at objections raised reveals there is more at stake than opposition to recreational marijuana:
Some commentators claim the taxes will become a hardship on patients, but Prop 64 has nothing to do with medical marijuana: the tax rate for medical marijuana has not been finalized yet (the most recent measure, AB 2243, did not pass the Senate Appropriations committee). In addition, Prop 64’s proposed taxes – a 15% sales tax, and a cultivation tax of $9.25 per ounce for flower, and $2.75 per ounce of leaves – are not out of line with recreational marijuana taxes in other states. Washington State now has a 37% tax on all sales, while growers and processors are subject to taxes according to the state’s standard tax table. Oregon created a 25% tax on all sales during their transition to recreational sales, with a 17% tax thereafter, in addition to local taxes. Colorado has a 15% tax rate on wholesale sales, and 10% sales tax, with additional local taxes collected as well. Alaska has tax of $50 per ounce on producers, and local taxes as well (Anchorage has a 5% tax for retail sales).
Taxation aside, many growers opposed “big business” gaining control of the industry, despite Prop 64’s rules offering a 5-year head start for small farmers:
  • “Seems big business will drive out the smaller guy with high application fees.”
  • “Does not provide appropriate protections for small and craft farmers.”
  •  “All about big money and turning over the industry to corporate pigs like Monsanto, big pharma, and big tobacco.”
But when we asked respondents whether they intend to embrace regulation under the new medical laws (MCRSA) that come into effect on January 1, 2018, it became clear that many are opposed to ANY type of regulation: only 41% indicated they would be applying for licensing, while a combined majority were either opposed (31%) or undecided (28%). Several comments noted opposition to regulation:
  • “It squeezes out all of the people that paved the way up to this point. It also wipes out prop 215 that we have worked and provided under for 20 years.”
  • “It is a sham and will destroy cannabis culture and replace it with a corporate, industrial, 1984-type of society where government = big brother.”
This is an unfortunate reality for many growers in the industry, but the times they are a changin’. The state has already mandated that California will have a regulated (medical) marijuana industry. The MCRSA will introduce local regulation, city and county taxes, licensing requirements, mandatory testing, packaging requirements, environmental controls, and water restrictions, and will be subject to oversight from several State Departments. We can’t turn back the clock and return to the unregulated industry created 20 years ago.
The industry will either need to embrace regulation, licensing, and oversight, or remain outside the law and in the shadows of the black market. The real danger of Prop 64, to those committed to unregulated trade, will come from an increase in the state’s fund to enforce compliance with the law.
If Prop 64 fails, it will not be a death-blow to the marijuana industry, nor will it be a boon to growers working within it. We will still be moving toward a future where regulations govern what happens. The industry will still need to decide. Whether or not the industry embraces regulation, of any kind, will become the ultimate deciding factor.