California’s Legal Weed Is So Heavily Taxed and Regulated That The Street Market Might Survive

“The situation in the market is pretty dire,” one major cannabis seller told us.

As of January 2018, anyone over the age of 21 can walk into a store in California and pick up some marijuana. All you need is some cash or a credit card.

To learn more about how legalized recreational cannabis sales works, we tracked a product, the Kiva chocolate bar, up the supply chain—from seed to sale. We talked to cannabis entrepreneurs along the way to find out what’s changed for them operating in a legal state market.

And what we found was surprising: Anxiety about the future of the legal market under California’s highly regulated—and highly taxed—system.

Some industry insiders told us that if the legal market remains so overtaxed and overregulated that the black market will continue to stay in business.

“The situation in the market is pretty dire,” says Kristi Knoblich Palmer, COO and co-founder of KIVA, which had to lay off employees for the first time in the company’s history after recreational legalization went into effect. “That has everything to do with the cost of cannabis to the end consumer.”