Imagine an environment so toxic to business that even drug dealers can’t make money? Then consider California, a place where the ending of the old Aesop’s fable, “The Goose that Laid the Golden Eggs,” is a lived experience.
California voters legalized recreational marijuana in 2016, making state and local governments giddy at the prospect of a tsunami of tax revenues and fees headed their way. The industry was to be well-regulated. Here in SLO, that requires that growers be at least 1,000 feet from any schools lest any mischievous tykes find themselves tempted, and drive-through sales are prohibited, protecting those who have already had way too much to smoke and are incapable of stumbling into the dispensary to seek more.
Cannabis tax revenues peaked in 2020 and have since decreased by 80 percent. Marijuana consumption has remained reasonably consistent, but now legal sales constitute less than 40 percent of all sales. Regulation, however, continues to thrive. Legions of bureaucrats are undoubtedly pleased with themselves and their efforts.
On Nov. 10, 2025, sfgate.com ran a piece (“Survival mode: It was once california’s top pot producing county. Now it is a bust”) describing the financial plight of licensed marijuana growers, highlighting one grower in Monterey County who is on the verge of going out of business and laying off 60 full-time workers. The grower complained of high regulatory costs, such as a $1 million fire sprinkler system in their greenhouse, something not required for other greenhouse crops, special extraction permits required, and an onerous cultivation tax assessed by the square foot on grow areas. Statewide, there are similar complaints.
Take a moment to think about it. Taxation and regulation have managed to cripple an industry that had previously managed to survive all efforts to eliminate it through prohibition, arrest, and imprisonment. The business environment for legal growers and retailers has grown so onerous that many choose to risk raids, arrest, and imprisonment, rather than try and navigate the taxes and regulations.
Cannabis is not an isolated industry. Conservatives have long complained of the overregulation and taxation of business generally, with those complaints being dismissed by a government establishment instinctively inclined to tax and regulate. It is what they do.
In addition to cannabis, the American steel and manufacturing industries have declined in large part due to environmental and labor regulations. Here in California, the harsh business climate and taxes have driven a number of large employers out of state. We also pay the nation’s highest gas prices due to taxes, special formulation requirements, and a hostility toward refineries. Car ownership is more expensive here, due to special emissions standards and testing and high registration costs. Even some Democrats like Gavin Newsom have conceded that we need to look at government regulations.
Yet, despite numerous demonstrations of the destructive impact of government on business, there are still those who seem enthralled with still further intrusion of government into the marketplace. In New York City, newly elected socialist Mayor Zohran Mamdani promises a chain of government-run grocery stores, an industry which already struggles with low profit margins. The plan will face several challenges.
First, what are they going to do about shoplifting? Will socialists be willing to endure the political “optics” of arresting and prosecuting shoplifters, especially those who pitifully explain that they were just stealing to feed their children (kids apparently having a surprising affinity for lobster, truffles, and Wagyu beef)? After all, the thieves will also be voters. But without a meaningful deterrent to theft, how do they keep a grocery store from quickly turning into a barren food bank?
Second, how could socialists effectively contain labor costs when they were negotiating with their political allies in the unions, who would press for ever-higher wages for their membership? How could city government resist the temptation to award desirable positions as political patronage? Recall the collapse of the Venezuelan petroleum industry when socialist Hugo Chavez threw out the Americans and staffed the industry with his inexperienced and incompetent political cronies.
Third, lifestyle proselytizing. How do you prevent the affluent and sophisticated urban progressives who will run the administration from imposing their personal dietary preferences in selecting the foods to be offered? Will they tolerate much-beloved junk food and sugary sodas? Alcohol? Meat? Recall Michelle Obama’s unsuccessful and wasteful campaign to force kale and fresh vegetables down the throats of schoolkids who preferred pizza and burgers. Will we see Pringles, Pepsi, and Little Debbie jettisoned in favor of sprouts, quinoa, and tofu? Will stores offering only organic, gluten-free, locavore, sustainably grown, fair trade foods do enough business to keep the doors open?
My fever dream: A coalition of New Yorkers with the munchies and California stoners join in common cause to reenact the Boston Tea Party and toss bales of cannabis and bags of contraband Doritos into the harbor. ∆
John Donegan is a retired attorney in Pismo Beach whose orange fingers betray his affinity for Cheetos. Send a response for publication to letters@newtimesslo.com.
This article appears in Jan 15-22, 2026.
John:
“…Taxation and regulation have managed to cripple an industry…” It is t these two factors that have destroyed an industry, it’s California’s sunshine that has. Although I’m not one to imbibe this product, my late parents did, in copious quantities as we drove around in our split window VW van in So-Cal. Why would anyone buy legal weed when they can simply toss a few seeds in a bucket at their front door and grow a tree? As someone who saw their father get carted away by a sheriff for having a pot seed on the floor of their vehicle in the 1970s, I’m glad these ridiculous laws are off the books now. I think every square out there who has never lit up should do so at least once in their life. With the quality of the Sensimilla now days, unlike Cheech and Chong, their doobies won’t blow up in their faces.
None of this was accidental. California’s legal cannabis market was designed to fail.
Putting Lori Ajax, a former alcohol regulator, in charge should’ve told us everything—cannabis was treated like booze plus plutonium. Prop 64 didn’t create a fair market; it legalized the same predatory “medical nonprofit” slimeballs, shell entities, and pay-to-play consultants who already knew how to game regulators.
Million-dollar sprinkler mandates, square-foot taxes, endless permits—while enforcement targeted the legal operators dumb enough to comply and the black market thrived. The result was inevitable: collapsing revenues, crushed small growers, and consumers going back underground.
Cannabis survived prohibition and prison. What killed it was California regulators who confused paperwork with policy and morality with taxation.
“Blow up”? I recall a gag you could buy in my remote youth which would cause a cigarette or cigar to blow up while being smoked. They were called “cigarette loads” and were small explosive sticks which would be inserted into the end of the ciggarette, and would detonate to amusing effect when the end burning reached them, startling the smoker, and shredding the end of the cigarrete. I haven’t looked recently, but am pretty sure they are no longer available.
None of this was accidental. California’s legal cannabis market was designed to fail.
Putting Lori Ajax, a former alcohol regulator, in charge should’ve told us everything—cannabis was treated like booze plus plutonium. Prop 64 didn’t create a fair market; it legalized the same predatory “medical nonprofit” slimeballs, shell entities, and pay-to-play consultants who already knew how to game regulators.
Million-dollar sprinkler mandates, square-foot taxes, endless permits—while enforcement targeted the legal operators dumb enough to comply and the black market thrived. The result was inevitable: collapsing revenues, crushed small growers, and consumers going back underground.
Cannabis survived prohibition and prison. What killed it was California regulators who confused paperwork with policy and morality with taxation.
Fidel Castro was intimately familiar with the exploding cigar gag.