Relatives of Jerry Garcia pull cannabis brand out of California as regulations let black market boom
A marijuana brand bearing the name of one of the world’s most famous stoners has pulled out of California as the state’s cannabis taxes gut legal operations and allow the black market to thrive.
Garcia Hand Picked – founded by the relatives of Grateful Dead guitarist Jerry Garcia – removed its products and operations from California as the state’s laws coupled with Federal taxes have left legitimate producers paying as much as 80 percent in taxes.
As businesses jump through hurdles to produce and sell marijuana, black market operations and illegal farms have managed to operate without legal barriers and undercut the efforts of legitimate markets.
The pullout of Garcia Hand Picked comes as experts have predicted scores of marijuana businesses could go bust in California as years of operating at losses to keep ahead of regulations comes to a head.
Grateful Dead guitarist Jerry Garcia smokes a joint. He was a prominent smoker of weed in his day
Marijuana sold by Garcia Hand Picked, a brand run by Jerry Garcia’s relatives
California legalized the production and sale of cannabis in 2016, but since then the path to profit has been crossed with regulatory red tape.
Required retail licenses can cost up to $100,000 per year to hold, and businesses are taxed up to 25 percent per retail sale.
Federal laws also prevent companies from deducting business taxes from federal taxes, leading to exorbitant taxes paid across the board.
From 2017 to 2022, California also charged a cultivation tax billing farmers by the square footage of their farms instead of the actual yield of their product, which allowed large corporate farms to thrive gutted small producers.
Since cannabis was legalized in California, the state has collected at least $4billion, according to Marijuana Moment.
Pre-rolled joints from Garcia Hand Picked. The brand recently left California
A Garcia Hand Picked grinder filled with marijuana. The brand is still available outside of California
Jerry Garcia’s relatives started Garcia Hand Picked. The singer died in 1995
While brands like Garcia Hand Picked struggled to follow the rules, illegal operations have been able to steal much of the market in California.
Operating without the costs of regulatory fees and taxes, black market weed producers and shops have been able to sell their products at a serious markdown compared to their legal competitors.
In the years after legalization, up to 80 percent of the marijuana sold in California was still purchased from illegal sources, according to Forbes.
Illegal storefronts have operated with near impunity, as the repercussions for getting caught are often no more severe than misdemeanors.
Sheriff’s Department’s Narcotics Bureau Lieutenant Howard Fuchs of the told the Los Angeles Times that authorities don’t bother prosecuting heavily if crimes are limited to selling cannabis.
‘There’s this attitude: It’s just cannabis, we’re not going to incarcerate people for that,’ he said. ‘Well, you’re just telling the legal market, ‘Good luck.’
An illegal marijuana storefront in Los Angeles. The stores have boomed since weed was legalized
Shoppers look through marijuana products at a legal store in California
Jerry Garcia was a born and bred Californian, and throughout his life became a pivotal cultural figure in the normalizing of marijuana use. For his family, basing their cannabis business in California was only natural.
‘This was a hard decision for them, they love California,’ cannabis consultant Andrew DeAngelo told SFGate. ‘They were born and bred here. This is very painful for them, I guarantee that.’
DeAngelo said the departure of a celebrity brand as prominent as Garcia Hand Picked was a grim sign of the times in the California market.
‘You can’t make any money in this market,’ he said. ‘Not only is Garcia leaving, a lot of people are leaving.’
The president of United Cannabis Business Association, Jerred Kiloh, gave a grim prediction for the California cannabis market’s future, arguing that years of debt assumed while keeping up with taxes and regulation fees was coming to a head
In the years after legalization, up to 80 percent of the marijuana sold in California was still purchased from illegal sources, according to Forbes
The president of United Cannabis Business Association, Jerred Kiloh, gave a grim prediction for the California cannabis market’s future, arguing that years of debt assumed while keeping up with taxes and regulation fees was coming to a head.
‘It’s probably ballooning quickly now, because people have no dollars left, and there isn’t a light at the end of the tunnel, and no one’s investing,’ he said, according to Green Market Report.
President of the San Francisco distributor Grizzly Peak, Matt Yamashita, gave a similar prediction in blunter terms, saying ‘It’s going to be a mass extinction event here shortly.’
‘In the next 12 months, I think half the retailers are going to be in business. I think 80% of the people in business will be gone. It’s inevitable. The bubble is going to burst,’ he said.