5 Problems of Marijuana Dispensaries in California

5 Problems of Marijuana Dispensaries in California

- in Business

Since January 1, 2018, marijuana use for recreational purposes became legal, which means recreational marijuana can be lawfully sold in the state of California.

Although it might be a good idea to invest in a marijuana dispensary since the market is not yet saturated; you should know that like every other business, business owners have continued to encounter significant obstacles in an industry that is expected to grow by 10% this year.

Listed below are 5 problems every Marijuana Dispensary In California​ is facing:

1. Marijuana retailers can’t use banks

This is a dire predicament for both retailers and state tax authorities. Since the federal government still classifies marijuana as a “Schedule 1” drug, the same level with heroin, banks that deal with marijuana money can be charged with money laundering.

This makes the weed business a cash business; which causes problems with tax collection, or vendor and salary payment.

Marijuana retailers who declare sales have to bring tax payments in cash every month to a guarded, bulletproof site. This reduces the numbers of marijuana dispensaries that declare sales. It also means that these dispensaries have to pay their employees with cash; this also increases the number of employees for a job that can easily be done by one person.

2. Increase risk of crime

Marijuana dispensary robbery is becoming a violent trend across the country, not just in California. Although it is prevalent in unlicensed dispensary stores, there is still a likelihood of licensed stores getting robbed too.

However, most licensed dispensaries are taking on strict security measures such as having a licensed armed guard 24 hours a day, a panic button, video surveillance with multiple cameras, and a series of bulletproof locked rooms.

Though this might serve as a warning, it does not completely eliminate the risk of being robbed. The accumulation of cash stockpiles can be a safety risk to dispensaries that are tasked to store and transport stacks of cash.

3. Black Market

The high tax rates on the sale of marijuana have opened up opportunities for black marketers. Considering this, a state-wide tax of 15%has been implemented on all recreational and medical cannabis products; plus, additional local taxes and fees push the price of an eighth of an ounce of “top-shelf weed” to about $60.

This results in a large percentage of marijuana users turning to the black market to purchase cheaper marijuana.

4. Federal Legality

Under federal law, marijuana remains illegal. Although, it is highly unlikely the government will focus on consumers who make small purchases. However, the possibility of persecution exists for dispensaries that run afoul of the strict regulation adopted by the state

5. Heavy Taxation

Marijuana dispensaries are heavily taxed. They sometimes face a tax rate of up to 70% for the flowers or buds. The internal revenue service (IRS) disallows business deductibles.

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