California’s $100 Million Marijuana Bailout Tells You All You Need to Know about Its Government

There are many great movies on the drug trade, but my personal favorite is Blow. The film stars Johnny Depp as George Jung (aka Boston George), a real-life drug smuggler who was sentenced to 70 years in prison in 1994.

Like most drug movies, Blow depicts the highs of the drug trade—parties, mansions, and rooms full of cash—as well as the lows: addiction, paranoia, and a loss of control. One thing that made Blow so good is it showed the incredible demand for drugs.

Whether they are dealing pot or cocaine, George and his partners can’t keep up with the huge demand no matter how much supply they get.

“I think it’s fair to say you underestimated the market,” George tells his business partner, Derek Foreal (Paul Reubens), 36 hours after moving a huge amount of product he said it would “take a year to sell.”

I bring up Blow in light of news that California’s legislature approved a $100-million plan to boost California’s struggling legal marijuana industry.

As the Los Angeles Times reports, the industry is in serious trouble. The growth of licensed cannabis shops has been dismal and far below state projections. Just 1,086 retail and delivery firms have been permitted to date—about 82 percent lower than the 6,000 cannabis shops the government anticipated.

How is this possible? Well, shortly after California legalized pot in 2016, lawmakers began burdening the industry with so many regulations—particularly myriad compliance orders associated with the California Environmental Quality Act (CEQA)—that businesses are drowning under paperwork, fees, and delays.

“Many cannabis growers, retailers and manufacturers have struggled to make the transition from a provisional, temporary license to a permanent one renewed on an annual basis — a process that requires a costly, complicated and time-consuming review of the negative environmental effects involved in a business and a plan for reducing those harms,” the Times reports.

With more than 80 percent of firms in the marijuana industry not fully licensed, one might think California lawmakers would be examining the regulatory framework that is strangling the industry. This is not what’s happening, however.

Instead, Gov. Gavin Newsom is trying to give marijuana businesses a six-month extension on the Jan. 1 deadline to transition from provisional licenses to full-time licensed shops. (This extension is being vigorously opposed by environmental groups.)

Additionally, the state is shelling out $100 million to help businesses navigate its regulatory labyrinth. Assemblyman Phil Ting (D-San Francisco), the chairman of the Assembly Budget Committee, told the Times “the funds, including $22 million earmarked for L.A., would help cities hire experts and staff to assist businesses in completing the environmental studies and transitioning the licenses to ‘help legitimate businesses succeed.’”

Cannabis industry trade leaders say this isn’t the kind of relief they need, however.

“It is a significant amount of money, but I don’t know that it actually answers the problem of provisional licenses making it through CEQA analysis in a timely manner to get an annual license,” Jerred Kiloh, president of the United Cannabis Business Assn., told the paper. “The real problem is CEQA analysis is a very arduous process. I think it would be good to have more reform of the licensing system instead of just putting money to it.”

Though marijuana was illegal almost everywhere in the world just a few short years ago, the global market is projected to hit $90 billion by 2026. The reason for this is obvious: there is a huge demand for cannabis, which can be used recreationally, medically, and generally (it supplies various other needs).

This is why Californians were so excited about marijuana legalization. Just a few years ago, officials were projecting it to be a $5 billion boon to the economy, and politicians were licking their chops at the prospect of $1 billion in new tax revenue for state and local governments, as the legal cannabis market slowly replaced the illicit market.