While we were all celebrating legalization in California, we never expected some of the new challenges which we’ve seen evolve in the local cannabis industry. California legalized medical cannabis in 1996 and recreational cannabis in 2018 — but today, in 2021, there is still a thriving black market.
What is going on? Why is there still a black market when cannabis is legal for medical, recreational, and delivery?
It turns out the answer is complicated —but it ultimately comes down to dollars and cents and what you are willing to spend.
What Do Cannabis and Taxes Have in Common?
Part of what made the legalization of cannabis attractive is the money it can bring in through taxes. These taxes are used to fund public services to support communities in the state of California.
Legally sold cannabis is taxed. According to the California Department of Tax and Fee Administration (CDTFA), cannabis has a hefty 15 percent excise tax. Since January 2018, California has collected $1.81 billion from taxed cannabis.
The CDFTA also determines the retail markup of cannabis, which is currently an 80 percent increase over the wholesale price. In addition to excise taxation, there are state taxes and local city and county taxes, which all drive up the retail price of cannabis.
How Do Regulations Impact the Legal Cannabis Market?
To sell cannabis legally, you’ve got to a permit. A legal dispensary (or legal adult-use cannabis delivery company) must pay the fees for licensing and charge taxes. This is a lot of cost to business owners—if they can even get a permit.
Business owners along the supply chain are also responsible for the cost of testing their cannabis. This means more than just THC and CBD levels. Your cannabis should also be tested for contaminants, solvents, and mold.
Further, each person in the supply chain needs to be paid. So, for example, if dispensaries buy from a distributor, who has also purchased from another middle man, there are significant markups.
All this adds up to a higher price for cannabis sold in legal dispensaries.
According to a 2019 article in Forbes magazine, when the CDTFA announced the cannabis tax increase, “many illicit growers say they cannot afford to pay the necessary state-required entrance fees to become compliant, let alone the additional taxes.”
In other words, even those who wish to abide by the laws sometimes cannot afford to do so.
Cali Needs an Affordable Legal Alternative to Black Market Cannabis
Leafly reports that “consumers are spending roughly $3 in the state’s underground cannabis economy for every $1 in the legal one.”
Between regulatory costs, taxes, paying the distributor, the cultivator, the extractor, and operating costs, there can be a 330 percent markup on your bag of weed.
While consumers may love the prices and convenience of illegal cannabis, it’s not always safe. Their weed isn’t tested for production, pesticides, or growing standards.
Instakush is the alternative to both inflated dispensary prices and sourcing bud from a potentially unsafe Black Market. We own the entire seed-to-sale operation. This means we are responsible for planting the seed, harvesting, and delivering it to your doorstep.
Since Instakush manages the supply chain from the cultivator to the extractor to the sale, we are able to sell for 30 to 50 percent less than other dispensaries.
This is legal cannabis, with no middleman. It’s clean, it’s tested, and it’s fresh.
How Much Do You Want to Pay for Cannabis?
Taxes and testing support the industry and keep everyone safe, but they do mean higher prices than what everyone was used to within the Black Market.
The more hands your cannabis passes through, the higher the price tag will be on that product.
Add in fees and taxes, and you’ve got an expensive product.
Instakush is a unique combination of high quality, but finally, for an affordable price. We offer legal adult-use cannabis delivered for less.