California’s Marijuana Paradise Lost

The black market in pot proliferates despite legalization.

By The Editorial Board
Feb. 7, 2023

Marijuana advocates us that legalizing the drug would curb the black market. We’re still waiting. The opposite has happened in California, where a glut of illegal weed is undercutting legal purveyors. Now progressives are proposing an interstate compact to export their pot and rescue the industry.

California voters in 2016 approved a ballot measure allowing the cultivation, sale and possession of pot for recreational use. Marijuana is classified as a Schedule I drug under the federal Controlled Substances Act, which means it has a high potential for abuse and is illegal to possess, manufacture and sell under federal law.

But Big Pot has persuaded state lawmakers and voters in 21 states that the drug is no greater danger to public health than alcohol, and legalizing it for recreational use within their borders will boost jobs and tax revenue. Former Attorney General William Barr once said this was “almost like a back door nullification of federal law.”

California has been at the forefront of this experiment, and it’s not turning out well. High taxes and regulation have made it harder for state-licensed businesses to make money. Significantly higher prices in the state-regulated market have led to a boom in the black market controlled by drug cartels, which has led to violence and water theft.

At the same time, California has struggled to enforce its pot laws. One reason is that the 2016 ballot measure reduced penalties for most pot offenses because of their alleged disparate impact on minorities. Illegal pot plantations have mushroomed.

Curaleaf Holdings, one of the world’s largest pot conglomerates, last month said it is pulling most of its operations out of California, Colorado and Oregon because “the current price compression caused by a lack of meaningful enforcement of the illicit market prevent us from generating an acceptable return on our investments.”

Garcia Hand Picked, which was created by the deceased musician Jerry Garcia’s family, has also bailed on California. “California cannabis debt bubble on verge of bursting,” an industry report warned last November. Financial challenges have “led many businesses to shuffle payments around, delay payments to vendors, or not to pay at all.”

All of this has Democrats in Sacramento scrambling to bail out their homegrown industry. Last fall they passed a law that would lift the state ban on marijuana exports and authorize the Governor subject to certain conditions to enter into compacts with other states where marijuana is legal to provide “additional legal outlets for cannabis and cannabis products produced in California.”

The state Department of Cannabis Control recently issued a memo arguing the federal government cannot “compel states to prohibit commercial cannabis activity as a matter of their own state laws.” While the feds would still be able to prosecute pot businesses, the agency claimed an interstate compact would pose no legal risk to the state.

Imagine if Texas were to form an interstate compact to sell firearms that are illegal under federal law. Some conservatives argue that states should be allowed to regulate pot within their borders. But California is proposing an interstate market to sell a product that is illegal under federal law, if the Biden Administration chose to enforce it. None of this is working like the pot promoters promised.