Outliers Collective COO Austin Birch and CEO Linc Fish
With stronger-than-ever backing for recreational marijuana usage, Proposition 64, also known as the Adult Use Marijuana Act, is expected to pass with relative ease. In response, the marijuana industry is looking at shifts across all boards, including changes for legally licensed dispensaries. Adjustments would need to be made to deal with the taxation inconsistencies between recreational and medical marijuana.
Under Proposition 64, all marijuana would be subject to a cultivation tax of $9.25 per ounce for dry flowers or $2.75 per ounce for leaves. There would also be a 15 percent sales tax on recreational, but not medical marijuana.
As a result, a dual categorization system will potentially be unavoidable, says Outliers Collective CEO Linc Fish. Licensed dispensaries will have to redesign their sales approach so that it caters to both types of marijuana designations. Fish predicts California dispensaries will follow the trends seen in Colorado where the entire process is split. For example, the check in and purchase counters would have two lines—one for recreational customers and another for medical patients.
The complications arise when attempting to categorize the strains by the amounts of active ingredients they contain.
"There are strains that are very high in CBD like Charlotte's Web, which is used for seizures a lot," says Fish. "You're not going to use Charlotte's Web to get high. It has some THC in it, but it's primarily an activator of the CBD. So nobody would argue that that's a recreational strain. And conversely, you have strains that are high in THC and very low in CBD."
But the strains' uses aren't always so clear-cut.
"It's a grey area when you get into strains like ACDC where there's excellent anti-inflammatory effects from the CBD, but it's also got some THC so it has a calming effect."
For licensed dispensaries like Outliers Collective, modifications will be time-consuming. But for unlicensed dispensaries that continue to operate illicitly, Fish says times are about to get tough. He foresees a wave of raids ten times the intensity of those that have already taken place in the county.
"Right now they aren't really collecting any tax revenue, so the government doesn't have a vested interest," Fish says. "They don't care. They aren't making any money, but there are hundreds of millions if not billions of dollars in tax revenue on the line here, and they aren't going to let them continue to operate if they don't pay."