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The Pepsi Challenge, Reimagined For Cannabis – And Charity: Can You Tell If Your Weed Is Sungrown?

By Bluntness EditorialMay 20, 2021

Bluntness Editorial

The Bluntness Editorial Staff is dedicated to bring you the many stories of cannabis culture - stories that speak to the enthusiast and expert in an unfiltered but factual manner. Everyday, our writers brings you deeply insightful and honest perspectives from all corners of the cannabis world, including some you may not expect.

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This article was originally published by Javier Hasse on Benzinga and appears here with permission.

California cannabis brand Flow Kana is sparking consumer and media conversation with its #SungrownChallenge campaign, which launched across social media last week and will soon be appearing on over 200 California dispensary screens.

Inspired by the famed Pepsi Challenge and the 1976 Judgement of Paris whereby French wine critics blind-tasted the best of French wines against the best of the then-emerging California wines. The #SungrownChallenge features a who’s who cadre of 28 blindfolded cannabis journalists, critics, social media influencers and industry leaders sampling California’s top-selling sungrown flower against California's top-selling indoor flower.

For every share of the #sungrownchallenge video on social media, Farmer’s Reserve by Flow Kana will donate $5 to Planting Justice, a California-based nonprofit focused on “food justice and community healing through planting, growing, and harvesting healthy food.” The donation will cap at $10,000.

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The Proposed Hemp Ban That Would Destroy a $28 Billion Success Story - The Bluntness

Photo by Leo_Visions on Unsplash

Hemp Ban Threatens $28B Industry

Congress is attempting to recriminalize most hemp products by redefining "hemp" in the federal spending package, threatening to wipe out 90–95% of a thriving $28+ billion industry. This isn't consumer protection; it's economic sabotage that would devastate farmers, destroy hundreds of thousands of jobs, eliminate billions in tax revenue, and push demand underground. The solution already exists: national standards with age-gating, testing, labeling, and responsible placement. If you work in, buy from, or care about this industry, you have 48–72 hours to make your voice heard.

Congressional negotiators are trying to bury a hemp definition change in appropriations language, a backdoor maneuver that would treat nearly any THC in hemp-derived products as federally illegal. This is happening in real time, behind closed doors, without public hearings.

Sen. Rand Paul has pledged to hold up spending bills to stop this ban, but he's issued a stark warning: there's a "real danger" the prohibitionists win unless constituents flood Congress with calls immediately.

The numbers tell the story:

The U.S. Hemp Roundtable estimates ~95% of the current market would be eliminated overnight
The industry supports a $28.4 billion economic footprint (conservative estimate)
HIFA pegs the total impact at multiple tens of billions when you include the broader legal cannabis ecosystem
Hundreds of thousands of jobs hang in the balance—from family farms to Main Street retailers

This isn't theoretical. 39 state attorneys general recently pressured Congress to clamp down on "intoxicating hemp" via exactly this type of definition change. The political machinery is already in motion.

Meanwhile, after President Trump publicly endorsed CBD for seniors, the hemp industry asked him to prevent Congress from undoing the legalization he himself signed in 2018. The industry's message is clear: we want regulation; not prohibition.

Why This Is Death by Policy

1) It Obliterates an Economic Engine Just When We Need It Most

Hemp and legal cannabis have become one of America's fastest-growing agricultural and retail sectors:

$28.4+ billion in annual economic activity from seed to shelf
Farm contracts across red and blue states providing stable income for rural America
Manufacturing, logistics, retail, and ancillary jobs spanning the entire supply chain
Hundreds of millions in tax revenue for state and local governments
A legal alternative that's kept countless consumers out of illicit markets

Destroying this overnight doesn't protect anyone. It's economic arson that punishes legal operators, farmers, and workers who played by the rules.

2) It Creates Chaos Without Making Anyone Safer

The 2018 Farm Bill drew a bright line at 0.3% delta-9 THC. That clarity worked. Suddenly criminalizing THCA, isomers, and other compliant cannabinoids will:

Confuse consumers who've relied on legal products for years
Whipsaw compliant businesses that invested millions in good faith
Burden law enforcement with unenforceable distinctions
Make America less safe, not more

The Congressional Research Service has already confirmed: these definition changes would effectively prohibit hemp-derived cannabinoid products that are currently legal.

3) It Guarantees an Underground Market Explosion

Prohibition doesn't eliminate demand, it just eliminates oversight. When states attempted sweeping hemp bans, consumers didn't stop buying; they started buying from:

Untested gray-market sources
Cross-border smugglers
Dealers with zero age-verification
Products with no quality control

A federal ban would nationalize this failure, creating exactly the unsafe, unregulated market that regulators claim to fear. Even the industry groups pressing the White House make this point: regulation beats prohibition for both safety AND jobs.

4) It Ignores What Federal Agencies Actually Asked For

The FDA has been explicit: they don't have the regulatory tools they need under current law. What they're asking for:

Serving limits
Warning labels
Adverse-event reporting frameworks
Clear enforcement authority

Congress should give them a framework, not a scorched-earth ban.

5) It Rejects Proven Solutions That Already Work

We don't need to guess what works. We have the playbook:

21+ age restrictions with ID verification
Potency caps and serving limits
Universal third-party testing for contaminants and total THC
Clear, standardized labeling with dosing information
Child-resistant packaging requirements
Marketing restrictions (no cartoons, no health claims)
Retailer licensing and spot-check enforcement

Multiple states and policy institutes have demonstrated these standards protect consumers while preserving a legal, taxpaying industry. This isn't hypothetical, it's happening right now.

6) It's Procedurally Cynical and Fundamentally Undemocratic

If this were a genuine public-health initiative, Congress would:

Hold committee hearings
Debate a comprehensive regulatory framework
Consult stakeholders, scientists, and enforcement
Vote transparently

Instead, they're smuggling a ban into an omnibus spending bill without debate. The Senate already stripped similar language once after public backlash, which proves this is politics, not policy.

The Blunt Truth: You Can't Ban Your Way to Safety

America tried prohibition with alcohol. It failed spectacularly.

People still want low-dose THC beverages, functional hemp products, and compliant CBD. The demand exists, the only question is whether we meet it with regulated, tested, age-restricted legal products or force it into underground markets with zero oversight.

Even Senator Rand Paul - no friend of overregulation - is sounding the alarm: "They're essentially going to ban hemp."

This isn't about protecting kids. Bans don't protect kids; rules do. What protects kids is making sure products are:

Behind counters or locked cases
Only sold to adults 21+
Properly labeled with clear warnings
Tested for safety and potency
Manufactured by licensed, accountable businesses

You can have a thriving legal industry OR an unregulated black market. You can't have neither.

Take Action Today

1) Use Both Automated Action Tools

Click here to tell Congress to stop the hemp ban. Then, message your Senators & Representative by clicking here.

2) Call the Capitol Switchboard: 202-224-3121

Ask for your Senators and Representative. Use this 30-second script:

"I'm a constituent calling to oppose any appropriations or Farm Bill language that bans hemp products. This would destroy a $28 billion industry and hundreds of thousands of jobs in our state. I support national standards—age-gating, testing, labeling, and placement restrictions, not prohibition that devastates legal businesses and pushes products underground. The Senate already removed similar language once. Please don't let it come back."

3) If You're an Industry Operator

Gather proof regulation works: COAs, labels, age-gate SOPs, compliance documentation
Email your delegation with real data showing your business model
Join trade group alerts for real-time intel on when and whom to call
Mobilize your customers, vendors, and employees. Congress needs to hear from Main Street, not just lobbyists

4) Frame This as an Economic Issue

When talking to lawmakers (especially Republicans), emphasize:

Job creation in rural America
Tax revenue for states struggling with budgets
Property rights and legal business investment
Free-market regulation vs. prohibition

When talking to Democrats, emphasize:

Criminal justice reform (don't re-criminalize legal products)
Worker protections in a legal, regulated industry
Consumer safety through standards, not bans
Environmental benefits of hemp agriculture

hand of farmer planting hemp seedlings in soil The Proposed Hemp Ban That Would Destroy a $28 Billion Success Story - The Bluntness Photo by GreenForce Staffing on Unsplash

The Hemp Industry's Earned the Right to Regulation, Not Extinction

Since the 2018 Farm Bill:

Farmers transitioned acres from failing crops to profitable hemp
Entrepreneurs built compliant businesses creating real jobs
States collected taxes and funded schools, infrastructure, and services
Consumers gained access to wellness products they trust
Researchers began studying cannabinoids with real therapeutic potential

This didn't happen by accident. It happened because Congress legalized hemp.

Now Congress wants to undo its own success, not because the industry failed, but because it succeeded beyond anyone's expectations and threatened entrenched interests.

The time for action is NOW. Not tomorrow. Not next week. Congress could attach this language to a must-pass spending bill within 48–72 hours.

This is your industry. This is your livelihood. This is your choice.

Make the call (Capitol Switchboard: 202-224-3121). Send the message. Make them hear you.

Additional Resources:

Hemp Industry & Farmers of America (HIFA)

U.S. Hemp Rountable.

OCM Alleges 'Rent-a-License' Scheme, Seeks License Revocation

OCM Alleges 'Rent-a-License' Scheme, Seeks License Revocation

Photo by Jon Tyson on Unsplash

NY Revokes License in Rent-a-License Scam

New York’s cannabis watchdog says Omnium Health let unlicensed operators hide under its license — a textbook case of “reverse licensing.” Regulators want Omnium’s processor and distributor licenses revoked and have ordered a retail recall tied to products made by unlicensed processors. Here’s what happened, who’s affected, and what retailers and consumers should do next

At-a-Glance

What’s new: NY’s Office of Cannabis Management (OCM) issued a Notice of Pleading (NOP) charging Omnium Health (d/b/a Omnium Canna) with facilitating unlicensed production under its license and ordered a statewide retail recall tied to products made by unlicensed processors.
Why it matters: Regulators call it “reverse licensing” - unlicensed operators allegedly producing/packaging cannabis under a licensee’s umbrella, which undermines market integrity and fairness.
Penalties sought: License revocation (processor + distributor), debarment from future licensure, civil penalties tied to projected revenue, and destruction of unlawfully made products.
Timeline: Investigation began February 2025; OCM announcement issued October 20, 2025; coverage followed October 22, 2025.

What Exactly Is OCM Alleging?

OCM says Omnium let unlicensed businesses use its facilities and resources, and charged them rent, creating a “rent-a-license” (aka “reverse licensing”) arrangement. Investigators cite contracts, audits, and witness testimony supporting the claim.

The NOP also points to seized materials, including unlabeled THCA isolate (no batch IDs or traceability) and packaging labeled “Omnium d/b/a MFused,” which investigators say reflected space and license rental.

Why this is a big deal: If true, it allows unvetted operators to push product into the legal market without meeting NY’s compliance requirements, disadvantaging operators who follow the rules.

What the State Wants to Do About It

In the NOP, OCM says it will seek:

Revocation of Omnium’s processor and distributor licenses
Debarment from future licensure
Civil penalties tied to projected revenue from the unauthorized products
Retail recall of products made by unlicensed processors
Destruction of unlawfully produced cannabis products

OCM leadership framed the alleged conduct as a “blatant breach” of rules designed to ensure transparency and fairness and emphasized that licenses aren’t transferable and only licensed operators may produce and distribute cannabis.

Independent coverage by Ganjapreneur, Cannabis Science & Technology and others highlights the same core facts: the recall order, the “reverse licensing” allegations, and the scope of penalties OCM intends to pursue.

Read the OCM's NOP HERE:

omnium-compliance-action-release.pdf

What Does the Statewide Retail Recall Mean in Practice?

Scope: OCM ordered a retail recall “from the market of all products made by unlicensed processors.” That language is broad; the NOP ties the recall to products associated with the alleged unlicensed production. Licensed retailers should review inventory, manifests, and batch data, and follow OCM’s recall instructions as issued.

Retailer actions (practical steps):

Isolate inventory potentially linked to the NOP (check supplier, lot/batch IDs, and packaging).
Follow OCM recall communications (return/hold procedures, signage requirements, and consumer notifications).
Document everything (chain of custody, quantities, dates, and staff actions) to demonstrate good-faith compliance.
Proactively communicate with customers about refunds/exchanges per OCM guidance to maintain trust.
Note: The recall directive and penalties will be finalized through the OCM process; retailers should monitor official OCM updates.

Consumers: If you purchased items later identified in the recall, follow retailer/OCM instructions on returns or disposal and keep purchase receipts where possible.

How “Reverse Licensing” Warps the Market

The “rent-a-license” play gives unlicensed operators a shortcut into store shelves without the costs, controls, and accountability that licensed operators carry. That distorts pricing, erodes consumer confidence, and saps compliant operators’ margins, exactly why OCM’s Trade Practices Bureau was set up to pursue “market integrity” threats like this.

The Timeline: Key Dates to Know

February 2025: OCM launches the Omnium investigation via the Trade Practices Bureau after a compliance referral.
October 20, 2025: OCM issues the NOP, outlines alleged “reverse licensing,” and announces the recall and penalties it will seek.
October 22, 2025: Coverage appears in industry news outlets summarizing OCM’s actions and the recall scope.

What Happens Next?

Omnium can respond to the NOP and contest the allegations through New York’s administrative process. In the meantime, the recall directive stands, and licensees should treat OCM’s communications as active compliance instructions. (For official recall status/updates, check OCM’s site and notices.)

If You’re a Licensed Operator, Use This Moment to Tighten the House

Quick self-audit checklist:

No “license lending.” Ensure third-party or white-label agreements don’t give operational control or production cover to unlicensed entities.
Transparent contracts. Every manufacturing/packaging/fulfillment relationship should be documented, disclosed (when required), and readily auditable.
Lot-level traceability. Batch IDs, manifests, test results, and movement logs must be complete and easily retrievable.
Visitor/vendor controls. Access logs and SOPs should prevent “shadow” production on your premises.
Rapid recall readiness. Have a written plan for quarantining product, notifying retailers, and executing returns within 24 hours of a directive.

These aren’t “nice to haves.” They’re the minimum for surviving increased enforcement and for protecting the brand you’re working to build.

Frequently Asked Questions

What is “reverse licensing” (aka “rent-a-license”)?
A scheme where an unlicensed operator uses a licensee’s facilities/resources to produce or package cannabis, often for a fee, then moves that product into retail as if it were the licensee’s. OCM calls this a threat to market integrity.

Did OCM document specific issues?
The NOP references packaging tied to “Omnium d/b/a MFused” and unlabeled THCA isolate with no batch traceability, red flags for illicit production and potency manipulation.

Is every Omnium-related product recalled?
OCM’s order targets products made by unlicensed processors; retailers will receive guidance identifying what to pull. Monitor official OCM communications for SKU/lot specifics.

What penalties is OCM seeking?
Revocation of Omnium’s licenses, debarment, civil penalties linked to revenue from unauthorized products, and destruction of unlawfully produced items.

The Bluntness Take: If you’re running a legit operation in New York, this case is a warning shot. The state is drawing a clear line: no borrowed licenses, no shadow production, no traceability gaps. The market is still fragile, and any shortcuts will be treated like existential threats to the program. Stay tight, stay transparent, and act fast on recall guidance.

Hall of Flowers NYC 2025: Cali Vibes Minus the Pulse of NY Cannabis

Hall of Flowers NYC Debut: Cali Vibes Minus the Pulse of NY Cannabis

Photo courtesy of Hall of Flowers

Hall of Flowers NYC 2025: Cali Vibes Minus the Pulse of NY Cannabis

Hall of Flowers (HOF) made its New York debut with a clean, trade-first show that fostered deeper conversations over spectacle. With a buyers-only opening day and tight credentialing, the floor moved at a measured pace, ideal for discovery and deal-making.

Upon entering through the doors at Pier 36 it was refreshing to see row after row of identical booths, neat as a spreadsheet, designed to let the product speak for itself. Buyers drifted through the aisles with line sheets instead of selfie sticks, the volume dialed way down compared to last month's Revelry event at the same location. And, maybe that was the point. Hall of Flowers’ first New York edition was designed for commerce, not commotion: a buyers-only opening day, tight credentialing, a controlled environment and pace that favored real conversations over spectacle.

The uniformity of Hall of Flowers' format erased the booth-flex arms race; most of the brands stood shoulder-to-shoulder on product, pricing, and execution. “Much easier to have conversations here than at Revelry,” several attendees told us. Others called it “weak” or “quiet” by comparison. One marketing exec involved in the event went all in saying, “Revelry is a flea market compared to Hall of Flowers.” What he meant by that is: Hall of Flowers is a curated, high-end trade event, whereas Revelry functions more as a community marketplace. I could see his point.

Multi-state polish, East Coast reality

By mid-day, you could feel the gravitational pull of the many out-of-state companies, brands and people. California heavyweights showed up to stake a claim: Alien Labs/Connected teased their New York play via Fluent; Jetty lined up buyers with a tidy, retail-ready menu. For extract lovers, a Royal Leaf (NY) × Kalya (CA) rosin tease felt like the kind of cross-coastal uplift New York’s concentrate set has been waiting for.

Not to be outdone, Massachusetts cannabis also showed up in force. Curaleaf which has several (formerly-medical) retail locations in NY already, showcased some of it's latest and greatest. Northampton's Melt-to-Make was looking to expand the reach for its gummy bases that simplify the process of manufacturing all-natural gummies. Jason Reposa from Good Feels was making the rounds, as were Nova Farms and Nimbus Cannabis Co., among others.

See on Instagram

What New York had to show for itself

Even with the Multi-state attention, several New York outfits cut through precisely because the floor was calm:

CannaPrints was an interesting innovation turning cannabinoids into dissolvable (edible) tabs and infused rolling papers. A small sublingual reminiscent of sacremental bread/eucharist, just infused. Which begs the question: What would Jesus Do?
Electraleaf continued to showcase its music-meets-street aesthetic with a menu that’s actually ready for shelves—vapes, five-packs, classic eighths—the sort of line a retail buyer can slot tomorrow.
Boukét played the brand story game flawlessly, modernizing a slice of New York history (“bouquet” as a Harlem code word) into giftable, premium-leaning products and packaging that moves on sight as much as on spec.
Canna Cure Farms brought the sun-grown sermon without the sermon, slow-dried, carefully cured flower that lets terps do the talking. In a potency-obsessed market, that education arc matters.
Jenny’s (Jenny Loves Me) covered the wellness flank, sugar-free, kosher, vegan edibles built for dietary constraints, plus hash-resin vapes and petite pre-rolls for the “real weed, cleaner inputs” crowd.
Nanticoke offered something buyers always ask for and rarely get: a scalable, greenhouse-grown, in-state supply that can carry everyday price tiers without feeling like compromise.

None of these plays needed a 20-foot truss to make the case. On a level floor, they stood out on their own merits.

See on Instagram

Two events, one thriving ecosystem

Comparisons to Revelry were inevitable. Revelry’s Buyers’ Club has become the heartbeat of New York’s legal market with 300+ licensed retailers and 200+ brands under one roof, the culture loud and the pace relentless - just like the city that never sleeps. Hall of Flowers is more "craft fair": quieter, credentialed, built for deliberate and intentional marketing and sales that go from “nice to meet you” to “send the follow-up” in real time. The market is clearly healthy enough for both events, however it's this writers personal opinion that each should consider 'collaboration over competition', where these two competing events can shine as one, at least here in NY.

It's also worth noting that on the eve of the event, the Office of Cannabis Management emailed licensees warning that Hall of Flowers might involve on-site consumption and indirect retail sales, and that participating in an “unpermitted cannabis event” could trigger penalties under 9 NYCRR Parts 120 and 133. The notice spooked the ecosystem: several NY licensees told us they skipped the show entirely, and others pared back staff rather than risk a paperwork misread or risking their license. On the floor, though, HOF ran a tight, trade-only program, buyers-first scheduling, credential checks, and sampling confined to appropriate licensees. Organizers and attendees described operations as above board; the notice read more like a blanket, cover-your-asses advisory than an actionable violation. The effect was real - the room was quieter than it might have been, but the sky did not fall for those exhibiting and in attendance.

- YouTube www.youtube.com

What remains after the badges come off

Designing for decisions works. A buyers-first schedule and uniform builds kept attention on product, price, and plans—not flash.
Cross-state collabs are the fastest upgrade path. If Royal Leaf × Kalya is a preview, rosin buyers finally have something premium to point at—made here, influenced there.
New York still rewards authenticity. Out-of-state polish draws the crowd; New York provenance sets the tone and pace.

Bottom line: If Revelry captures the soul of New York cannabis community + culture, Hall of Flowers arrived as its sober counterpart, Cali vibes, yes, but disciplined, transactional, and oddly sufficient.

Diverse mix of people sitting outdoors, around a table smiling at camera

Hall of Flowers 2025: Why This Santa Rosa Showcase Remains a Standard Bearer for Cannabis Trade Shows

Press photo provided by Hall of Flowers

Hall of Flowers 2025: Cannabis Trade Show Leader

The cannabis industry has no shortage of events, but very few manage to balance business, culture, and community the way Hall of Flowers does. Since its launch in 2018, the Santa Rosa-based show has become a must-attend gathering for licensed brands, retailers, investors, and innovators.

This year’s edition takes place September 10–11, 2025, at the Sonoma County Fairgrounds, continuing a legacy that goes far beyond trade show floor traffic. Hall of Flowers has become a barometer for where cannabis is now and where it's heading—and how brands and buyers can stay ahead of the curve.

Mixed crowd walking around at outdoor conference or festival Scenes from Hall of FlowersPress photo provided by Hall of Flowers

A Curated Approach That Stands the Test of Time

Unlike many trade expos where volume trumps value, Hall of Flowers has remained highly curated. Exhibitors are vetted, attendees are qualified, and the result is a show that feels purposeful, not chaotic.

That focus has allowed the event to grow steadily while maintaining its reputation as a serious B2B marketplace. For many retailers and buyers in the California market, Hall of Flowers isn’t just another industry meet-up—it’s where real deals are made.

What sets Hall of Flowers apart is its commitment to making cannabis culture a central part of the experience:

Consumption lounges and sampling protocols that are compliant but still engaging.
Music, art, and culinary programming that elevate the atmosphere beyond booths and badges.
A sense of authenticity that reminds attendees why they’re in this space in the first place.

It’s this fusion of culture with commerce that ensures Hall of Flowers never feels like a sterile convention hall. Instead, it feels like a living snapshot of the cannabis movement, evolving in real time.

Overhead shot of Hall of Flowers conference - showing booths, vendors and attendees Scenes from Hall of FlowersPress photo provided by Hall of Flowers

Adapting to Industry Shifts

The cannabis landscape is constantly changing—tight regulations, shifting consumer demand, and new technologies keep everyone on their toes. Hall of Flowers has responded by:

Introducing new platforms like AXIS Club (exclusive networking for executives and buyers) and BLUEPRINT (a showcase for emerging technologies, packaging, and solutions).
Expanding to include festival-style elements, like live music and food, that connect brands more directly with consumers.
Offering compliance-friendly sampling systems that allow buyers to evaluate products responsibly.

By evolving with the market, the event has avoided the stagnation that plagues so many conferences.

West Coast Roots, National Relevance

While Hall of Flowers is deeply tied to California—the birthplace of modern cannabis culture—its influence is national. In fact, next month, New York will host it's first Hall of Flowers October 8 & 9. For comparison, New York’s long-standing Revelry Buyers Club carries a similar ethos: connecting licensed operators, retailers, and brands in a curated environment that prioritizes quality relationships over hype. Revelry will be hosting its latest Revelry Festival event on Friday and Saturday September 12 & 13 at Pier 36.

Together, events like Hall of Flowers and Revelry Buyers Club represent a shift toward smarter, community-driven trade experiences that support the legal market and elevate the cannabis industry’s credibility while lifting-up the entire cannabis community.

Two people talking at industry conference Respect My Region's Joey Brabo talking to an exhibitor at Hall of FlowersPress photo provided by Hall of Flowers

Why It Still Matters in 2025

For brands, Hall of Flowers is about visibility in front of the right buyers. For retailers, it’s about finding standout products in an increasingly crowded space. And for the industry as a whole, it’s about building an ecosystem where commerce, culture, and compliance can coexist.

Seven years in, Hall of Flowers remains more than just a trade show. It’s a statement: that cannabis deserves events as sophisticated and dynamic as the plant itself.

Animated GIF of wallet with money; with wife taking the wallet after spouse tries to hand denomination

Legal Cannabis Markets Hit Historic $25 Billion Tax Revenue Milestone

Giphy

Legal Cannabis Hits $25B Tax Milestone!

While 2024 set a new annual record of $4.4 billion in state cannabis taxes, California's decision to raise rates from 15% to 19% exposes the death spiral threatening legal markets nationwide

Legal cannabis markets have generated more than $24.7 billion in cumulative state tax revenue since 2014, with 2024 setting a record $4.4 billion — but California's proposed July 2025 tax hike from 15% to 19% reveals a fundamental contradiction in cannabis policy that could undermine the entire legal industry's future.

The unprecedented tax milestone represents both triumph and warning. While celebrating revenue success, industry experts warn that aggressive taxation is creating a vicious cycle that drives consumers back to illicit markets and threatens the sustainability of legalization itself.

The California Contradiction: Success Masking Systemic Failure

California leads all states with over $1 billion in cannabis tax revenue for 2024, but this apparent success masks a deeper crisis. On July 1, 2025, the state's cannabis excise tax was scheduled to rise from 15% to 19% — a staggering 26% increase mandated by a 2022 law that automatically raises rates when tax revenues decline. However, just this week, the California Assembly delivered a stunning 74-0 vote to save legal cannabis market from "Extinction Level Event." Unanimous bipartisan support for AB 564 delays the catastrophic 26% tax hike until 2030, but industry isn't out of the woods yet. The Senate vote to enact the bill will be the next crucial test of whether California is serious about saving its cannabis industry — or content to watch it collapse under the weight of its own contradictions.

All of this combined creates what industry experts call a "death spiral": when legal sales drop due to high taxes competing with illicit markets, the state responds by raising taxes further, making legal products even less competitive.

"More businesses will close sooner as the legal price is just too far away from illegally obtained products," warns Jerred Kiloh, president of the United Cannabis Business Association. "Less investment in starting or continuing cannabis operations will occur, and demand for cannabis licenses will decline exponentially."

Since January 2018, California has generated more than $6.7 billion in total cannabis tax revenue, but thousands of licensed businesses have shuttered due to what industry leaders describe as a toxic mix of overregulation, inconsistent enforcement, and sky-high operational costs that make competing with untaxed illicit markets nearly impossible.

image of California traffic road sign that says - END - at edge of cliff overlooking Pacific Ocean California’s Cannabis Tax Hike Is a Death Blow to the Legal Market Photo by Patrick Perkins on Unsplash

The Illicit Market Reality Behind the Revenue Numbers

The $25 billion in legal tax revenue tells only part of the story. State-funded research indicates that illicit markets continue to supply the majority of cannabis consumers in California despite years of legalization — a pattern emerging across multiple states with high tax rates.

Amy O'Gorman Jenkins of the California Cannabis Operators Association put it starkly: "We're urging the Legislature and Administration to act quickly and freeze the tax at 15%. If we want a regulated market to survive in California, the time to intervene is now."

The fundamental equation is simple but devastating: High taxes = higher prices = lower legal demand = more illicit activity = less tax revenue. This cycle not only undermines tax collection goals but defeats the primary public safety and consumer protection objectives of legalization.

States Walking the Tightrope: Revenue vs. Market Viability

Other leading cannabis states demonstrate the delicate balance required for sustainable tax policy. Illinois generated $578 million in 2024 tax revenue with a more moderate approach, while Michigan ($524 million) and Washington ($516 million) have maintained steady growth without the dramatic rate increases that are crushing California's market.

The contrast is stark: while these states show consistent growth in both revenue and market health, California's aggressive taxation is creating what industry leaders call "a slow-motion abandonment of legalization's promise."

States like New York and Massachusetts face similar challenges, burdening cannabis with heavy taxes and rigid regulations while wondering why legal sales lag behind projections and illicit markets remain robust.

Cannabis Tax Revenue Powers State Programs — When Markets Survive

Where sustainable tax policies exist, cannabis revenue has transformed state budgets. Legal cannabis taxes have funded Medicaid, education, school construction, housing, roads, early literacy, bullying prevention, behavioral health, alcohol and drug treatment, veterans' services, conservation, job training, conviction expungement expenses, and reinvestment in communities disproportionately affected by prohibition.

California's 15% excise tax supports programs for childcare and early childhood development, medical research, youth substance abuse prevention, and environmental recovery. However, these benefits become meaningless if overtaxation destroys the legal market generating the revenue.

Industry Employment Reflects Market Stress

The cannabis workforce data reveals the strain of current policies. While the industry supports 425,002 full-time equivalent jobs nationwide, employment dropped 3.4% in 2024 even as sales grew to $30.1 billion.

"The cannabis industry has shifted from a phase of hyper-growth to one of operational discipline," said Karson Humiston, Founder & CEO of Vangst. This "operational discipline" often means businesses consolidating, closing, or moving operations to more tax-friendly jurisdictions.

The employment decline reflects more than market maturation — it signals an industry under severe regulatory and tax pressure that's forcing efficiency through elimination rather than growth through opportunity.

The Federal 280E Problem Amplifies State Tax Damage

The tax burden becomes even more crushing when combined with federal restrictions. Cannabis companies cannot deduct normal business expenses under federal tax code Section 280E, creating effective tax rates that can exceed 70% in high-tax states like California.

This federal-state tax combination creates what industry experts describe as "fundamentally dishonest governance" — leaders claim to support thriving legal cannabis industries while enacting policies that make success virtually impossible.

A Growing Problem Threatening National Legalization Goals

Twenty-four states have legalized adult-use cannabis, but California's experience serves as a cautionary tale for emerging markets. States like Ohio and New York, despite showing growth, risk repeating California's mistakes if they prioritize short-term tax revenue over long-term market sustainability.

The lesson is clear: sustainable cannabis markets require tax policies that allow legal businesses to compete with illicit alternatives. Otherwise, legalization becomes an expensive failure that generates modest tax revenue while maintaining robust criminal markets.

Policy Solutions: Learning from Success and Failure

Successful cannabis markets share common characteristics: moderate tax rates, streamlined regulations, consistent enforcement against illicit operators, and policies that prioritize market development over revenue extraction.

Assembly member Matt Haney's bill to block California's tax hike passed its first committee vote unanimously, showing bipartisan recognition that the current path is unsustainable. However, with the increase already implemented, California faces a critical test of whether political leaders will prioritize long-term industry health over short-term revenue needs.

The Real Test: Sustainable Growth vs. Short-Term Revenue Grabs

The $25 billion tax revenue milestone should be celebrated — but with crucial caveats. This revenue represents the potential of well-regulated cannabis markets, not validation of any specific tax policy approach.

California's experience proves that treating cannabis as a limitless cash cow while ignoring market dynamics leads to industry collapse. The question for other states is whether they'll learn from this cautionary tale or repeat the same mistakes.

Nationwide legalization could generate $8.5 billion annually for all states, according to tax policy researchers, but only if states adopt sustainable policies that allow legal markets to thrive rather than merely survive.

Looking Ahead: Promise vs. Reality

The cannabis industry's evolution from rapid expansion to what experts call "operational discipline" reflects both market maturation and policy-induced stress. The $25 billion milestone demonstrates cannabis taxation's potential — but California's crisis reveals how quickly success can turn to failure with misguided policy.

For policymakers, the lesson is urgent: cannabis tax policy must balance revenue generation with market viability. Success means building sustainable industries that generate consistent, long-term tax revenue while achieving legalization's broader goals of consumer safety, criminal justice reform, and economic opportunity.

The $25 billion represents not just past achievement, but a foundation that could either support continued growth or serve as a peak before policy-induced collapse. The choice belongs to lawmakers willing to learn from both success stories and cautionary tales.

Analysis based on data from the Marijuana Policy Project, NORML, Vangst Staffing, Whitney Economics, and industry reporting on California's tax policy impacts.

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