Findings and Recommendations

Illicit activities are one of several major factors contributing to the reduction in funds available for community needs. Response: I disagree partially with this finding. Illicit activities will affect legal activities, but I would not consider it a major contributing factor. Annual legal cannabis sales in California have continued to decrease since the nation’s biggest cannabis market launched recreational sales nearly 8 years ago. In 2022, legal sales reached $5.3 billion, according to figures released by the California Department of Tax and Fee Administration. This is down 8.2% from $5.77 billion in 2021. This decline has continued year after year. Much of this could be contributed to the market being flooded at the program's infancy. The statistics have also shown that more Cannabis businesses went under than succeeded in California. To say that the illicit market is one major factor contributing to the reduction, doesn’t seem to reflect the information provided in the Civil Grand Jury’s report. The Monterey County Board of Supervisors have reduced the tax rates by 75% since 2018 after Monterey County Measure Y was imposed and State Proposition 64 which outlined the use of State Tax funds. A reduced tax rate coupled with the businesses failing has had a substantial impact on the funds generated from legal sales. As noted in the Civil Grand Jury’s report, stricter regulations have resulted in multiple business closures, bankruptcies, and defaulting on more than 6 million in unpaid taxes. Many in the cannabis sector see the high taxes and a limited number of dispensaries as the main culprits for the decrease, viewing the legal market as broken and dysfunctional. Another contributing factor to the reduced funds available for community needs is the fact the illicit market became less profitable as the prices for cannabis fell. This could be attributed to California 1414 Natividad Road, Salinas CA 93906 (831) 755-3700 www.montereysheriff.org Sheriff-Coroner Keeping the peace since 1850 still representing roughly 20% of the $26 billion industry. I equate this to the supply and demand theory. As more legal cannabis floods the market the price will undoubtedly go down, thus less need for illicit cannabis. It is also possibly more costly to run an illicit operation now with limited avenues to pass the cost to the consumer, as they would have a cheaper legal option. Taking into consideration, per this report over 50 cannabis businesses have closed or filled bankruptcy, coupled with a tax rate being reduced for growers by 75%, and the market being flooded by legal cannabis, one should expect the tax revenues will be lower, and in this case much lower. This can all be summed up as less illicit growth, means fewer illicit activities.