Los Angeles Cannabis Revenues Go Up In Smoke

420 FILE - Is Los Angeles Making the Same Mistakes when it comes to Cannabis? 

Michigan’s new 24% wholesale cannabis tax was designed as a revenue solution. What it’s becoming is a case study in unintended consequences. 

In the first month alone, legal cannabis sales dropped 16%. That is a significant contraction for a mature market that had previously found stability. At the same time, a new lawsuit is challenging the tax structure, arguing it creates unconstitutional tax pyramiding and inflates consumer prices beyond legal limits. 

Now, a bipartisan group of lawmakers is attempting to repeal the tax entirely, despite the projected $420 million it was meant to generate. 

This situation highlights a broader issue facing regulated industries. When tax policy ignores market dynamics, it does not just reduce margins. It shifts behavior. Consumers look for alternatives, operators struggle to survive, and the illicit market regains ground. 

For those operating in cannabis or advising within it, Michigan is a real-time example of how quickly a market can be disrupted by well-intentioned but poorly executed policy. 

The question is not whether the industry will respond. It already is. The question is whether policymakers will adapt fast enough to stabilize the market before long-term damage is done. 

So where does Los Angeles land on this. Is this a temporary misstep or a warning sign for other cities and states considering similar moves?

(Jay Handal is a veteran community advocate and contributor to CityWatch. He serves as co-chair of the Neighborhood Council Budget Advocates and treasurer of the West LA-Sawtelle Neighborhood Council. With years of grassroots organizing and civic engagement, Jay is a leading voice for transparency, budget reform, and community empowerment in Los Angeles.)