California’s Overly Restrictive Cannabis Laws Incentivize Illegal Activity

It’s no secret that California has a massive cannabis illicit market, despite the fact that it is perfectly legal (under state law) to sell cannabis if a business goes through the licensing process and complies with state and local laws. However, since the passage of the Medicinal and Adult-Use Cannabis Regulation Act (MAUCRSA), and the opening of licensing in 2018, the state’s illicit-market problems seem to have only gotten worse, not better. There were reportedly 3,000 illicit cannabis businesses in late 2019; that number is probably much higher today.

It seems counterintuitive that a state that allows licensed medicinal and recreational cannabis activity would have such a robust illicit market. However, the reasons that the illicit market is alive and well are baked into state and local laws themselves. For starters, the fact that MAUCRSA allows cities to ban commercial cannabis activities altogether has led to many cities doing just that. This is a lose-lose for everyone involved: illicit businesses continue in those cities (why wouldn’t they when prohibition never worked in the first place), cities lose out on tax and licensing revenue, and customers lose out on access to tested and safe cannabis.

It doesn’t just end with local

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