Calif cities say no to New Pot shops out of fear industry is ‘collapsing’

Calif cities say no to New Pot shops out of fear industry is ‘collapsing’

One California city is saying no to any new pot stores out of fear that its local cannabis industry is “collapsing.”

The Palm Springs City Council voted last week to place a 45-day moratorium on accepting applications for any new cannabis stores in the Southern California city. The law takes effect immediately, according to KESQ-TV.

Palm Springs currently has 27 operating cannabis stores despite only having about 45,000 residents, making the desert city home to one of the highest concentrations of pot shops in the state and raising the alarm that there are too many pot stores for the local market.

Veronica Goedhart, the director of special program compliance for the city, told KESQ that the number of pot stores has gotten “a little out of control and we’re trying to reel it in.”

The new law comes as cities across the state confront the uneven nature of California’s cannabis industry. The majority of California municipalities have completely blocked legal pot shops from opening, which has concentrated the state’s pot shops in the small number of cities that do allow them.

One recent analysis by Hirsh Jain, a cannabis consultant at Ananda Strategy, found that more than 40% of the state’s legal pot shops are concentrated in just seven cities: Long Beach, Los Angeles, Santa Rosa, Sacramento, San Francisco, Santa Ana and Palm Springs. Jain told Green Market Report that retailers are facing a “bloodbath” in these cities because of fierce competition, with retailers going out of business.

That’s left leaders in cities like Palm Springs worried that an overabundance of stores near each other will cause the industry to fail. Goedhart said last week that the city is also considering lowering taxes for existing cannabis retailers in the city.

“The industry is facing a lot of challenges with taxes, and then the competition with the oversaturation, so we really want to revisit what we can do to prevent the industry from collapsing,” Goedhart told KESQ.

Other cities with high concentrations of pot shops have also gone this route. In June, San Francisco passed a moratorium on receiving new pot shop applications until at least 2028, and Santa Ana in Southern California is no longer accepting pot shop applications. Los Angeles is not accepting new applications for pot shops either, unless the store’s owner has qualified as a social equity applicant, defined by the state as someone who is from a marginalized community or was disproportionately harmed by the war on drugs.

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Region: California