Is There Corruption In California? ❌

A new lawsuit is accusing California regulators of turning a blind eye to bad behavior for more tax revenue...

In Today’s Issue:

  • → A California Lawsuit. ❌

  • → Cannabis Unions. 🤷‍♂️

  • → Legalization In Italy. 🌿

Are California Regulators Failing?

A lawsuit has been filed against Californias’ top cannabis regulator to solve a growing problem…

Why is such a large percentage of cannabis products in California purchased from illicit sources?

Over 50% of all cannabis products purchased in the region are purchased from illegal sources.

One retail chain in the region is now claiming the state of California should bear this burden of blame.

The lawsuit…

The lawsuit was filed by the parent company of Catalyst Cannabis Co — a cannabis retail chain that claims the regulatory system has allowed criminals to exploit legal distribution permits.

Consequently, they claim that these organizations are able to divert “millions of pounds” of cannabis to the illicit market – all while state officials “turn a blind eye” to this activity.

How it works in practice…

They claim criminals have been legally buying an unknown number of cannabis distribution licenses

To do so they are hiring frontmen.

Once these permits are secured, these frontmen are then able to purchase large quantities of legal cannabis products at wholesale prices.

In the event that the license holders face scrutiny from law enforcement they simply walk away from the license, and following this they proceed to gain a new license using a different frontman.

Where exactly all of this cannabis is then shipped to remains largely unaccounted for.

“This leads to two inevitable and ultimately devastating consequences,” claims the suit, filed Sept. 15 in Orange County Superior Court:

  • → Cannabis products are considerably cheaper in the illicit market in California.

  • → California misses out on hundreds of millions of USD dollars each year in taxes.

All the way to the top…

The suit also alleges that the Department of Cannabis Control is well aware of this problem.

Despite this awareness, they are refusing to address this million-dollar problem.

The DCC has “inexplicably opted to ‘look the other way’ rather than protect the public and legal cannabis operators such as HNHPC from the illegal black-market sale of cannabis.”

Taking this one step further, they are suggesting the state of California is turning a blind eye due to the tax revenue they receive.

“The State is collecting substantial ‘cultivation taxes’ from Burner Distros, and it wants that tax revenue to continue flowing despite knowing it is receiving cultivation taxes on far more cannabis than ultimately is being sold in licensed dispensaries” the suit alleges.

Lastly, they claim the state is well aware of the right solution to solve this problem, however, nothing has changed in light of the fact that the state has collected over $340 million USD in cultivation taxes.

Our Take

This is a bad look for the state of California and Metrc which is the company responsible for tracking the chain of custody of cannabis products.

The fact that a cannabis retail chain is willing to take this issue to court highlights the level of frustration being felt in the State.

The Need For Unions In Cannabis?

The Economic Policy Institute outlines the potential benefits of cannabis employees joining unions…

In a recent report, the Economic Policy Institute paints a very clear picture:

People working in the cannabis industry will receive better compensation if they choose to unionize.

What the numbers say…

Based on its research, there are clear financial incentives for cannabis employees to join unions:

Cultivation:

  • → Cannabis cultivation workers could make $7,030 USD more in wages each year.

Processing:

Unionized workers in traditional manufacturing jobs similar to cannabis processing and extraction roles receive 23.6%–28.0% more than nonunion workers.

  • → Cannabis processing workers could make $8,690 USD more in wages each year.

Retail stores:

Unionized retail workers in jobs similar to cannabis retail jobs earn 7.6%–10.7% more than non-unionized retail workers.

  • → Cannabis retail workers could, on average, make $2,810 USD more in wages each year.

Looking forward

It’s difficult to see a future where we don’t see unions forming in cannabis with these numbers.

“The best means of ensuring that workers in cannabis have a voice on the job and can share in the rewards of a newly legalized industry is to safeguard and strengthen the fundamental rights of workers to organize collectively in a union.” — said The Economic Policy Institute.

Our Take

As someone who has nothing to lose or gain from cannabis employees joining unions, I can certainly foresee this happening.

The financial incentives speak for themselves on this occasion, however, I would also like to speak to more people to learn of any potential downsides.

A Vote For Cannabis In Italy

Italians will have the opportunity to legalize cannabis as support in favor of reform continues to grow…

Cannabis advocates in Italy said on Saturday they have successfully gathered enough signatures to trigger a referendum to legalize cannabis.

This sets the stage for a vote that could occur at the beginning of 2022 once all signatures are confirmed.

What are they voting on?

The referendum proposal seeks to legalize cannabis cultivation for personal use, in addition to easing the penalties for cannabis-related crimes.

If the bill passes the people selling cannabis would no longer be at risk of receiving prison sentences for selling small amounts of cannabis.

Record-breaking time…

The organizers of the petition gathered the required 500,000 signatures in less than 7 days.

This is in large part thanks to the approval of new legislation in Italy that allows signatures to be collected online.

"This is an extraordinary result but it's not surprising," said the organizing committee.

"The speed of the support shows the desire for change on cannabis," the committee added.

Antonella Soldo, of the Better Legal cannabis pressure group, said almost half of the signatories were aged under 25.

The challenges…

Italy's main political parties have different opinions on cannabis.

  • → The 5-Star Movement favors legalization.

  • → The right-wing League favors prohibition.

  • → Brothers of Italy favors prohibition.

  • → The center-left Democratic Party is neutral.

Despite this, progress is still being made.

Our Take

There are now two clear paths for all adults in Italy to gain broader access to cannabis.

With all this progress, I suspect Italy could become one of the first European nations to officially legalize cannabis for adult-use purposes.

Bonus Section:

If you gained value from this edition of Four PM, share it with your favorite cannabis professionals. 🌎

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