L.A. Medical Marijuana Blog: The Cost of the Crackdown

Before the federal government began flexing its muscle and coming down hard on lawful medical marijuana dispensaries in California, we were in a recession.

You probably noticed.

What you may not realize is that the crackdown on the medical marijuana industry has had severe economic consequences that have reverberated throughout our cities, our state and even our country.

Los Angeles marijuana lawyers know that this significant toll involves thousands of jobs lost and a great deal of tax revenue up in smoke.

You may recall that officials with the U.S. Justice Department announced their crackdown of medical marijuana dispensaries operating within a certain distance of schools. This was almost a year ago now, and of course, federal prosecutors did not keep their scope limited to those operations breaking state laws.

Not only has the economy taken a direct hit, but you also have a loss of productivity from patients who require the drug to function. It’s either now unavailable or much more difficult to obtain.

The National Organization for the Reform of Marijuana Laws (NORML), indicates that the average medical marijuana dispensary employed anywhere from six to 10 people. Gross revenues at these operations ranged from about $500,000 to $1 million annually. Shutting down just a handful of these means the loss of tens of millions of dollars in tax revenues and legal jobs.

A recent study by the Americans for Safe Access, which promotes legalization, indicated that sales of medicinal marijuana have the ability to generate more than $100 million in tax revenue for California. That’s each year.

Let’s consider some other facts:

• California as a state is running a $16 billion deficit.
• Gov. Jerry Brown has said that if voters don’t approve significant increases in taxes, schools and public safety services will suffer severe cuts.
• Three California cities have filed for bankruptcy in the last few months, including: Stockton, Mammoth Lakes and San Bernadino.

This is not the time to be implementing further cuts to revenue!

And yet, the federal government pressed forward with its “war on weed.” Rather than simply targeting those locations that were breaking state law, they went on to seemingly make up reasons why certain shops couldn’t operate.

For example, Oakland’s Harborside Health Center, which was hailed as the country’s biggest pot shop, was targeted because, “It was too big.” What other business are you aware of that is forced to close simply because it is successful? This was an operation that by itself raked in $20 million annually and employed more than 100 workers. Plus, Oakland had a five percent tax on marijuana sales, which meant more than $1 million in annual revenue for the city. That’s money that covers police, firefighters, teachers and more.

Now, you have the U.S. Attorney’s office requesting information on every single dispensary operating in San Francisco. This is despite the fact that half of those shops have already closed in the last year anyway.

Meanwhile, you have President Barack Obama on the campaign trail, claiming neither he nor his administration is out to shut down dispensaries that are operating according to the legal letter of state law.

However, the disconnect is clear and the economic impact is staggering.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:
Obama’s War On Weed In California: Cannabis Crackdown Has Dire Economic Consequences, Aug. 28, 2012, By Carly Schwartz, The Huffington Post
More Blog Entries:
Los Angeles City Orders Pot Shops to Close by Sept. 6, Aug. 19, 2012, Los Angeles Marijuana Lawyer Blog