Will Provisional Licenses Save California’s Cannabis Industry

  • Results from a gap in California’s cultivation licensing between those growers holding active licenses, inactive licenses, or temporary licenses soon to expire mean that:
  • Prices will be higher — With the California market already constrained, the licensing gap will drive up prices; the combination of higher prices and higher taxes will push legal consumers out of the market.
  • Demand will increase in the illicit market — By restricting licenses, suppliers will be driven back into the shadows where there is ample demand nationally for California product.
  • Tax revenues will decrease — With lower demand, lower output, and lower sales, tax revenues will continue to fall short of estimates.
  • The counties hardest hit by license expirations will be in Northern California (e.g., Humboldt, Mendocino, Monterey, and Santa Barbara), which will extend a significant economic impact beyond simply output, sales, and harvest taxes. Lower employment and higher costs for social services will ensue.