I recently read about some of the financial problems over at High Times. Like a lot of people in the cannabis industry, I remember reading it in the 1970s and ‘80s and I saw the magazine as an institution.
It was great fun, and the articles, while sometimes pretty corny, were always a hoot. In a way I’m sad to read about the company’s financial problems, but at the same time, I have to wonder how they could have missed the writing on the wall.
When states legalize marijuana, they do it because (a) they are following the will of the voters, (b) they’ve finally come to their collective senses and realize that fighting a war they cannot win is stupid, and (c) they see it as a way to generate tax revenue. The last point is important for anyone in this industry because when states start to see tax money, they will go to great lengths to protect that revenue stream.
Washington and Colorado are both taking in about $1 million a day in marijuana tax revenue. That’s great because taxes pay for schools, roads, police, infrastructure, sewer systems, etc.
On one hand, legal marijuana is good because the state can collect tax revenues that didn’t previously exist, and consumers have access to better, cheaper and safer cannabis in a wider selection of products without the threat of arrest or prosecution.
However, it also means that open-air pot markets and consumption events are going to be severely restricted and/or shut down — a sign that events like Cannabis Cups are going to go the way of the horse and buggy. After all, can you imagine a liquor event where people openly sold untaxed moonshine and held contests where judges got drunk trying to decide who made the most potent booze? It would never be allowed to happen.
The states with legal recreational marijuana are now not only in the business of regulating it, but also in the business of shutting down the bad actors who threaten the livelihood of those playing by the rules and working hard to make a profit in a new, regulated and taxed industry.
In Washington, once marijuana was legalized, the state wasted little time in shutting down the unregulated medical dispensaries that flourished before adult-use sales were allowed. It was the right thing to do, and it was also the state’s duty. Many of the most vocal supporters of shutting down unlicensed medical dispensaries were former dispensary owners who now owned licensed, legal retail outlets and didn’t want to compete with people who weren’t paying taxes.
It makes sense. No one who invests millions in a bar, nightclub or marijuana store is going to be happy with untaxed competitors down the road operating with a big, unfair advantage.
This all gets me back to High Times.
In June, New Cannabis Ventures reported that Hightimes Holdings, the parent company of High Times magazine and Cannabis Cup events, filed documents with the Securities Exchange Commission showing a year-over-year sales decline of 64.9% for Q1 — including an 82.8% decline in events revenue.
According to the article, Hightimes Holdings indicated some of that decline was due to timing. But the fact is that states with legal, recreational marijuana have become increasingly intolerant of Cannabis Cup-style events.
Unlicensed, open-air pot contests and consumption festivals will inevitably run into two big problems: They threaten the state’s ability to tax and regulate marijuana, and they will be frowned upon because public consumption of booze, tobacco and cannabis is very likely going to violate state and local laws.
Greg James
Publisher