Marijuana Negative Solvency


Startup costs and licensing fees encourage black market---but those are local choices, not federal



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Marijuana Neg
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Startup costs and licensing fees encourage black market---but those are local choices, not federal


Fertig 19---a writer in Washington, D.C., covering cannabis and politics. (Natalie, “How Legal Marijuana Is Helping the Black Market”, Politico, July 21st, 2019, https://www.politico.com/magazine/story/2019/07/21/legal-marijuana-black-market-227414)//EL
High startup costs, licensing fees, and taxes make it hard for cannabis businesses to compete with unlicensed dispensaries that get equal billing on Weedmaps, the Yelp of cannabis. Los Angeles, for instance, is estimated to have more than 1,000 dispensaries, according to some advocates, but only 200 of them are licensed. This means the vast majority are illegal businesses.
This problem has existed ever since the early 2000s when law enforcement failed to address the explosion of medical dispensaries. The result was the growth of a vigorous unlicensed businesses—operating in the open, but with no permits to sell cannabis. The problem metastasized when the state legalized adult-use marijuana in 2016. Los Angeles was slower to issue licenses than some other Californian cities like San Francisco or neighboring West Hollywood, leaving a market gap for unlicensed players to fill. Customers in Los Angeles can’t easily distinguish a licensed dispensary from an unlicensed one.
The city has dedicated close to $14 million to the problem. And it has conducted raids, most notably a citywide crackdown in 2018 that resulted in the closure of 108 unlicensed businesses—but often the dispensaries just pop up again somewhere else. The city shuts off power and then the dispensaries buy generators. The LA city attorney has begun to go after landlords, levying $20,000 fines for every day the illicit dispensaries remain open.

1NC – Alt causes

Licensing problems, regulatory complexity, and city bans are alt causes


White 18 [Martha White, NBC writer, “Growing like a weed? California marijuana market off to slow start”, April 20th, https://www.nbcnews.com/business/business-news/growing-weed-california-marijuana-market-slow-start-n867871?icid=related]
The launch of the California market has been a total mess, and not entirely unexpected,” said Troy Dayton, CEO and co-founder of cannabis market research firm Arcview Group. “This is the most complex, onerous and far-reaching regulatory scheme that’s ever been tried. Every time you add a level of complexity, you add a level of uncertainty,” he said.
According to research firm BDS Analytics, 2018 sales at dispensaries licensed to sell for recreational use in California were $339 million through February, a figure below the state’s expectations. Greg Shoenfeld, vice president of operations at BDS Analytics, said initial projections could have been overly optimistic.”Whenever there’s a proposal to move to a legalized market, the best case scenarios are laid out in terms of revenue expectation, but typically, implementation moves a bit slower,” he said.
Experts suggest that much of the industry is still operating underground. “We estimate that 85 to 90 percent of the industry that existed last year is not licensed,” said Chris Beals, president and general counsel for Weedmaps.
Although some faulted the state for its pace of issuing licenses, Beals said the bottleneck was happening at the municipal level. “The biggest problem has been that there’s been a complete failure of local governments to issue licenses,” he said, adding that 85 percent of cities and counties in the state have bans on recreational marijuana retailers.
The thinking goes that, without legal storefronts from which to purchase their cannabis products, people will continue to rely on the black market.


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