Happy customers, Chris Sampson (left) and Nick Cestarollo (right), outside Mercy Wellness on Redwood Dr. in Cotati on February 27, 2021. Isabelle Barkey//The STAR
The legalization of cannabis in California carries with it a host of different meanings for different aspects of the industry; from dispensaries, cultivators, and distributors, to the workers and customers they serve. But what does legalization actually look like?
For starters, cannabis has been legal for medical purposes since 1996, when the California Compassionate Use Act made it legal for a doctor to approve certain patients to use cannabis, as well as their primary caregiver to grow the drug for them, as stated on the website of Kann California Law Group.
Recreational use of cannabis didn’t become legal until 2016, when Prop 64 passed and allowed for the adult use of cannabis, as well as additional taxes on cannabis grown and sold for recreational use. The proposition laid out an opportunity for cannabis to become a state-regulated industry.
For California, the expanding legal weed industry is a significant source of tax revenue that the state has been tapping to its full potential. The California Department of Tax and Fee Administration (CDTFA) reported in a press release that from January 2018, when recreational taxes went into effect, to November 2020, the total legal cannabis program tax revenue was $1.81 billion.
Cannabis products are taxed multiple times before reaching the customer, which is why dispensaries sell their products anywhere from $8 for a pre rolled joint containing one gram, to $140 for a concentrated tincture.
According to the legislation, and in a California state budget proposal from last February, Prop 64 outlined two state taxes- “a 15 percent excise tax on retail gross receipts… [and] a cultivation tax on the weight of harvested plants.” Under these tax codes, “final distributors” are responsible for submitting both taxes to the CDTFA, even though all licensed parties in the industry are legally responsible for paying those taxes. And to top it all off, regular sales tax is included upon the sale of products.
The state then puts this revenue into the Cannabis Tax Fund to be used for various state-funded programs, “including $2 million per year to the UC San Diego Center for Medical Cannabis Research to study medical marijuana; $10 million per year for 11 years for public California universities to research and evaluate the implementation and impact of Proposition 64; $3 million annually for five years to the Department of the California Highway Patrol for developing protocols to determine whether a vehicle driver is impaired due to marijuana consumption; and $10 million, increasing each year by $10 million until settling at $50 million in 2022, for grants to local health departments and community-based nonprofits supporting job placement, mental health treatment and substance use disorder treatment,” according to a San Francisco Business Times article, written by journalist Ted Andersen.
On top of three different state taxes on cannabis, local taxes can be placed on dispensary products, and those laws can differentiate on a local level.
For example, in Santa Rosa, dispensaries are required “to contribute 3% of all adult cannabis sales to the city,” said Karen Kissler, owner of Alternatives Collective in Santa Rosa. She explained that customers with a medical card are exempt from this 3% added cost because it’s only added to adult-use purchases.
Ultimately, legalization for the state and local governments is a cash-cow, a steadily increasing flow of revenue that can be allocated to multiple other government-funded programs.
But then where does this leave cultivators and dispensaries?
It mostly means that Sonoma County cultivators are having a difficult time competing in the market, for various reasons ranging from the cost of growing and government laws, to increasingly impactful fire seasons.
“Things have been very rough for farmers over the last few years. It seems that things are getting a little better for them as the market becomes better defined. The supply chain is also starting to stabilize but between taxes, fires, and general costs things are still unnecessarily difficult for the farmers,” said Chris Coloumbe, founding board member of the Cannabis Distributors Association and former CEO of Pacific Expeditors, a cannabis consulting and distribution company.
“Most products are produced outside of Sonoma. Humboldt and [the] central coast are the major producers. Sonoma County is still lagging behind in its policy development which has kept most operators out of the regulated market. Our previous portfolio of 55 companies only had 2 producers from Sonoma County,” he continued.
For dispensaries, on the other hand, full legalization meant that they could serve more customers and cater to individuals without medical cards.
Prop 64 opened legal marijuana for recreational purposes for adults over 21, but it also blurred the line of how to define dispensaries: healthcare or regular retail businesses. Dispensaries had the opportunity to change their business licenses from strictly medical, to both medical and recreational, or to just recreational.
Michael Fitzgerald, a manager at Organicann in Santa Rosa, explained that the dispensary, “converted from medicinal to recreational… [but] we still honor [it] if you have the state medical card.”
The blurred lines mean that it’s hard to know how many people go to dispensaries to actually seek medical treatment, or who go to get cannabis for adult use. There are not many dispensaries left anymore that cater only to patients who use medical marijuana, and on top of that, many adults over 21 experience medical benefits while recreationally using.
One such customer and student at UC Santa Cruz who’s name is changed in this article for her medical privacy, Paola Palmer, explained that she had been using cannabis recreationally when she noticed medical benefits for abdominal pain from food intolerances, as well as mental health problems she’d been experiencing.
“I didn’t think too much of it actually when I was actually doing it, but in hindsight I was like, that’s why I would always smoke after I ate, so that I wouldn’t be in pain… or if I smoked before I ate… I could eat without like worrying about pain, because I was having pain basically after everything [I ate]. And then if I had anxiety, it definitely helped because, my kind of anxiety is I feel like I need to be doing something all the time, and so… for me it’s easier to smoke, and relax and watch YouTube,” she explained.
Dispensaries have also been able to operate as essential businesses throughout the pandemic, an experience some workers are thrilled to be a part of, but an experience that’s been difficult to adapt to for some places.
Nathaniel Roth, a manager at Alternatives Collective, said that working during the pandemic has been “actually pretty rewarding. It’s definitely given me the human interaction that I’ve craved, the patients don’t have much human interaction coming in, so it’s kind of a nice way to mingle and socialize, but also give people what they need to get through the pandemic.”
Owner Karen Kissler explained, “We’re helping people get through it… people that haven’t tried it before… are coming en masse to trying cannabis and especially CBD products.” She says they are using their products as an alternative to other substances like alcohol or other less regulated or unsafe drugs.
“We’re [also] seeing an expansion of the demographic we serve… [particularly] a growth in the older demographic people who are in Oakmont and Bennett Valley, people who aren’t used to buying it on a regular basis but wanna try it for things like insomnia and anxiety. So I would say our largest growth in demographic is an older population,” she continued.
Dispensaries have also seen increases to their delivery services when they offer the option, and long lines at stores that are strictly in-person.
Fitzgerald described the experience as “difficult for sure… [Organicann has] enough space for like a mini little Costco for weed so there’s plenty of space for people to come on in and walk around but we do limit it… like 20 people if I’m not mistaken might be 25… once it gets to that amount we have them wait outside until people start coming outside.”
Another dispensary in Santa Rosa, Sonoma Patient Group, has had a similar experience.
A manager at the dispensary, Kevin McEachern, said, “We have to follow parameters, we’re a lot slower, I can’t move through customers as quickly, we can only have one person in our lobby at a time. Before we were able to have up to four people or more, you know, it’s definitely slowed us down, people are having to wait in lines… [and business] has been up and down, but our delivery service has definitely almost increased like five times at least, deliveries became extremely important.”
A former delivery driver for a dispensary in Santa Cruz, who asked to remain anonymous due to the stigmatized nature of marijuana in general, said, “The only difference that the pandemic had an impact on my job was the amount of deliveries I was asked to go on, it doubled if not tripled during some weeks. Also, the amount of traffic was significantly reduced, making deliveries much easier to do and made the delivery times much shorter so I was able to get them the medicine they needed quicker… The amount of patients I interacted would vary throughout the month. Some days it’ll be as little as 3 people, other days I’m interacting with as many as 10-15 people during my shifts.”
But the final, and extremely important aspect of legalization, and something to consider when discussing cannabis, is the people who have felt the full power of the justice system for possession, sale, and distribution of cannabis before it was legal.
“On the topic of legalization, I’m happy this nation is starting to realize that marijuana is not as big of an issue on a federal level as some out-of-touch politicians make it out to be. Putting some individuals such as Derek Harris from [Louisiana] in prison for 25 years for selling less than a gram of weed to an officer, whilst other “[white] collared” individuals such as Chuckwuemeka Eze who was convicted of bank fraud… worth over 1.4 million dollars and… got only [51 months] in prison. I’m just glad that our nation is maturing and taking the steps to make life more fair for its citizens. But there is still a long road of healing ahead, but nothing our nation can’t recover from,” the former driver explained.
The criminal justice system and its faults are a continuing topic of importance for the United States, and the legalization of weed is another important piece to this puzzle.
On her personal thoughts of legalization, Palmer said, “I feel like legalization is also problematic, because of how many people are already behind bars because of it. So as far as that aspect, that’s really [messed up]. And you know, just in general, the whole outlook of weed has changed with time, because you know it used to be like, [society said] ‘only gross people would do it’ … ‘dirty hippies’, or homeless people, so it’s just kind of like, having dispensaries be so normalized, and the people that you see in there are, you know, quote-on-quote everyday people, so that’s interesting.”
If public opinion is changing, then why are so many people still in jail because of cannabis?
More information on the cases of Derek Harris and Chuckwuemeka Eze, visit the websites below:
https://www.cnn.com/2020/08/19/us/derek-harris-marijuana-sentenced-freed-trnd/index.html
