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.
