California’s Legal Pot Industry ‘Collapsing’: ‘Buyers setting prices’

In a letter to California Governor Gavin Newsom, State Senate President pro Tempore Toni Atkins, and State Assembly Speaker Anthony Rendon, a group of cannabis industry leaders wrote that “we have been pushed to a breaking point” because of the regulatory system put in place . . .

I guess the “Legalize it and tax it” people got what they wanted. I see the same collapse with more regulation in Michigan. This should be a warning to all states when bureaucracy gets in the way of the free market.

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Legal market regulation costs
+
massive inflation caused by the actions of the federal reserve

====== A cluster Fuck for the whole industry

Black-grey-regulated all deal with rising input costs.

From electricity 10 percent increases year over year,
Nutrient costs (if you mix your own salts your affected the least, if you buy premade your affected the most), and rising costs in labor.

As all of our costs go up, our margins have to go down, as we are one of the industry’s that can’t really increase our cost with inflation.

We have to much margin built in , and to much competition between the black and regulated market , for is to raise our prices. When the black market outsells the legal market by 4-1 the regulated market can’t raise their price. When the black market indoor growers are getting gutted by aaa light DEP growers, they can’t really raise their prices.

Custies incomes may rise with inflation, but their expenses are rising at a faster rate. Which means their incomes are shrinking. What happens when your incomes shrink? You look for cheaper alternatives. Can’t afford beef you buy chicken. Can’t afford za, you buy aaa light deps.

Shit flows down hill.

I forgot to mention the fucked up tax code, where you can only write off the cost of goods sold. This may be why they never federally legalize it. They need that increased tax revenue like a whole In the head. What better way to fix our out of whack budget then to tax the newest fastest growing industry at a rate higher then all other industry’s, (don’t forget about the lovely cash seizures through civil asset forfeiture).

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I blame Cheech and Chong.

Paul Reubens too for good measure.

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Working within the California market I notice 2 significant differences compared to last year.

1, with the rise of other quasi legal markets like Oklahoma there has been an unprecedented amount of non Cali product entering the traditional market that has substantially driven traditional prices down. There are fewer back door and “burner” distro transactions taking place and the transactions that do happen are at lower price points.

2, there is a lot more shitty product on the taxed market. Lots of mediocre $700 ins and $400 b grade deps grown by people that frankly have no business in the market. All they do is drag it down.

I’m in a relatively highly taxed city with relatively high real estate costs (compared to up north) and can still turn a decent profit with aaa deps. It’s honestly just like any other business, the ones that haven’t learned their craft and put out a shit product with piss poor yields will fail. The ones that can’t operate a business because they’re used to traditional market 1000% margins will fail. There are people local to me that say it costs them over $1k a unit to produce deps, those are the people bitching right now.

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I’ve got a great handle on costs, but the future sure sounds bleak!

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There is no future for those that don’t know their craft. We’ve got people doing apprentice work and expecting journeyman wages.

The folks that know what they’re doing are cranking out good product that costs $400 or less a unit. Gotta pull 3 a light, 6 times a year.

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I can tell you work on a pretty tight ship. These are always my squad goals.

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How though? Am I missing something?

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Corporate structure and general squandering on a roughly 30,000 square foot flower canopy…roughly 10 unecessry executive positions with high salaries, use of off the shelf bottled hydro store nutes, overwater and pay $90k a month to dispose of runoff. Air conditioned greenhouse in a desert climate. Just a general shitshow.

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Absolutely sounds like it.

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Welcome to the legal markets.

We been dealing with shitty laws in WA which force most profits to the state and retailers for years.

As P/P, we get hit with all the costs and the smallest amount of profitability. Also, there is a flood of shitty products to markets every year for us, and there are always people cheating. The biggest thing I have seen that helps is just time and recognition while producing products that people can afford and are better than your competitors at the same or lower price points.

WA doesn’t let P/P sell to the public, so we really get double fucked. Finding good relationships, keeping costs down and be efficient are really key. Right now, we have limited supply costs due to relationships and literally just being honest with the people we do business with.

Cannabis is definitely a struggle here in WA, but if you continue to push, more doors continue to open

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It’s not that hard. You just have to know your craft like the back of your hand….

You’re in a position where your learning as you go, where the rest of us did that many years ago so we can hit the ground running.

Most who say it’s difficult are the guys who jumped into cannabis as an investment opportunity.

There’s something to be said for those of us who struggled to even feed ourselves in an effort for a better crop and a brighter future.

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Processing is literally only 1 part of the business. Many things have to function and succeed in order to be successful. Many, many costs, managing people, making relationships with retailers and producers, producing packaging that looks decent and allows for quick packing of a lot of units and dealing direct with factories to help keep costs down, managing and transporting order; and I’ve done that while maintaining a full time job because cannabis doesn’t pay. I’ve literally never taken a paycheck and some weeks I spent close to 80hrs/wk to get the operation moving to where I could hire experts for the lab.

And yes, I did self invest and build a business off 0 investment from anyone. I did use this forum back in the day to learn how to extract and distill cannabis. And yes, i’ve taken many hits; it’s not always feeding my family, but the cost for me has been time; which is massive. And yes, I am now moving away from being in the lab and stuff to being more of operations and sales; and I am now looking for a rockstar to take that over for me.

All in all, i just get tired of all the bullshit. I’ve extracted and distilled probably more times and understand tons of the theory probably over at least half the people on this forum. Yea, I have never used the black market as a way to feed myself or my family, so yea, I did learn how to process as I began to build a business; and I’ve learned that processing is only like 10-20% of the overall business.

Legal markets are a bit different from slanging stuff out the back door.

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Nice attempt to throw some shade.

I’m in the legal market too. I’m very aware of how different it is.

Maybe if you had known anything before jumping into the business you would have realized building a lab solely for ethanol extraction and distillation was the worst decision possible. you would have been more profitable from the get go and would have saved 10’s of thousands of dollars.

You bought a processing license when you could have bought both a producer processor license. Giant mistake.

You have a ton in overhead because you don’t grow anything and are dependent on purchasing material from other farms…

Instead of making large batches of carts you do everything to order…. Literally driving your man power through the roof.

I could go on and on.

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I really don’t care that you like to hate on me. Yeas, I did buy a processing license back in the day, and yea, we used to buy material, but now we don’t.

I wish you would just leave me alone.

Block me if you don’t like what I have to say.

And yes I’ll always be here to judge the ignorant shit that comes out of your mouth

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All that amounted to you struggling to be profitable and is the main reason your opinion on the market is so shitty… because YOU made bad investments

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I obviously don’t know the market as I deal directly with producer, retailers and purchase managers.

Any celebrity that has a strain named after them

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Gotta think of everything that goes into it when the term “Seed to Sale” is used. :point_up: