The legal cannabis brand, founded by the family of late Grateful Dead star Jerry Garcia, has stopped operations in California due to a thriving black market for marijuana and a challenging environment for legitimate businesses.
A spokesman for Garcia Hand Picked, which the deceased guitarist's family launched in 2020, confirmed to SFGATE that the business left the Golden State and didn't specify a return date.
A spokesman for Holistic Industries said the brand's parent company, Garcia Hand Picked, is choosing a new local partner for the cultivation, production, sales and distribution of the high quality flower in CA.
The Garcia Hand PickedGarcia Hand Picked brand will be available in Colorado, Maryland, Michigan, Massachusetts and Oregon. The decision to suspend operations in the state was difficult because of the late musician's birth in California and rose to fame in the Bay Area.
Andrew DeAngelo, a cannabis consultant, told SFGate, This was a hard decision for them, they love California. They were born and bred here. This is very painful for them, I guarantee that. DeAngelo said not only is Garcia leaving, but a lot of people are leaving. California legalized recreational marijuana in 2016 and has generated $4 billion in tax revenue in the past four years.
The state has enacted a number of taxes that make the cost of doing business prohibitive for many cannabis firms and created incentives for buyers to return to a booming black market that has been estimated at nearly $8 billion a year.
The state of California has a 15% excise tax on recreational marijuana purchases. Retailers have to pay for licenses that can cost upwards of $100,000 annually and are also taxed on retail sales. Growers pay a cultivation tax of $9.25 per ounce of flowers and $2.75 per ounce of leaves. The local and municipal governments can impose additional taxes on marijuana consumers, growers, and retailers, in addition to the state taxes.
The federal tax policies have hampered legal cannabis businesses by preventing them from accessing deductions and credits available to other companies. According to the U.S. Senate Finance Committee, the ban has created an effective tax rate as high as 80% for legal cannabis businesses.
On the black market, buyers and sellers can skirt all those regulations and taxes at the risk of potential prosecution. While law enforcement does not charge illegal growing operations and unlicensed stores, penalties are relatively light under California law, which makes it hard to keep bad actors from returning to the black market after their punishment.
The National Organization for Marijuana Laws NORML states that possession with intent to distribute is punishable by six months in prison and a $500 fine for the sale or delivery of marijuana without a license or the cultivation of more than six marijuana plants without a license.