WOODLAND, Calif. — When Proposition 64 was passed in 2016, California began its long journey of regulating the industry and preparing for potential tax revenues that were to come from marijuana.

Last year was the first year recreational marijuana was sold legally across the state and the price of marijuana products went up and the tax revenues for the state came in around $82 million less than anticipated.

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Dan Grace, the co-founder of Dark Heart Nursery and former president of the California Cannabis Industry Association, said that a large portion of the issues was because of high taxes on the businesses and changes in regulation. The taxes and regulation led to several businesses raising prices for consumers.

"Oh, last year was brutal," Grace said. "As consumers, people probably saw around a 40 to 50 percent increase in the cost of what they usually buy."

Grace said that the higher prices make it easier for illegal or black market marijuana businesses to thrive.

Grace's Oakland-based company is a nursery that is working to open a nursery in Yolo County. He said his company has been working on this project for the past two years and it hopes to be able to start growing in Yolo County after by next year.

Grace's business started as a medical cannabis nursery. He said that when recreational marijuana was legalized, his business had to adhere to new regulation which took some time and money.

Grace said that Dark Heart does not even try to work with counties that have extreme regulations against marijuana businesses. Only 40 percent of counties and 33 percent of cities allow for marijuana businesses to set up shop, according to Marijuana Business Daily.

Going forward, California legislators have introduced legislation, Assembly Bill 286, to potentially lower taxes for regulated businesses. Grace said that hopefully with lower taxes, businesses can lower prices, allowing for more business and leading to more tax revenue for the state to fund government programs.


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