Harborside's Steve DeAngelo Sees 'Blue Skies' Ahead for Cannabis, Warns Against Overtaxing

Photo Credit: Terry Chea/AP/Shutterstock
March 12, 2019
Updated 5d ago

By Chloe Aiello

For the first time in his 45 years in the cannabis industry, Steve DeAngelo is feeling pretty darn carefree. But as the co-founder of one of California's most iconic dispensaries, he has a word of warning for states looking to legalize: watch your taxes.

"I'm seeing pretty blue skies right now. It's difficult for me to imagine we are going to see a political reversal," DeAngelo told Cheddar, in a wide-ranging interview from Austin, Texas, for South by Southwest (SXSW). "I'm not lying awake at night worrying about anything right now for the first time in about 45 years."

His comments come on the heels of news that his medical and recreational cannabis company Harborside is heading toward a public debut. The company inked a definitive merger agreement for a reverse takeover of Toronto-based Lineage Grow Company ($BUDD). Pending approval from the Canadian Securities Exchange, which could take anywhere from two weeks to a couple of months, the company will trade on the CSE under the ticker, "HBOR."

Although Harborside is making a play for the Canadian markets, DeAngelo said he is optimistic that U.S. markets will also open to American marijuana companies.

"I think the U.S. exchanges are going to open to cannabis companies in the not-too-distant future. I think we'll have interstate commerce in the not-too-distant future," he said.

As more state-level industries come online, however, that means more tough decisions about regulation. California has had a particularly rough go since the state legalized adult recreational use at the start of 2018 ー and DeAngelo has had front row seats.

Transforming a loosely-regulated, "semi-legal grey market," as DeAngelo described it, to a highly-regulated recreational market has been anything but easy as companies fight to acquire licenses and keep up with stringent and shifting regulations for testing, packaging, advertising, and more. Of all California's missteps, however, DeAngelo pinpointed taxes as the most egregious.

"If you overtax cannabis, you just empower the black market and defeat the purposes of passing the legislation in the first place. So that is one piece of advice that I would give to every jurisdiction that's considering moving forward with cannabis reform," he said.

California has a famously flourishing black market ー an estimated 80 percent of cannabis sold is sourced illegally, according to The Los Angeles Times.

"People are willing to pay a bit more to go into a shop where they know that it's safe, they know the cannabis is tested. But they won't pay 50 or 60 percent more," DeAngelo said.

Regulatory hiccups aside, DeAngelo is optimistic about the future of the industry and what he calls a "cannabis renaissance" ー just so long as those negatively impacted by marijuana criminalization can partake.

"If we as a society have decided that cannabis should not have been made legal and it's not a crime anymore, how can we justify continuing to punish people ... for the rest of their lives?" DeAngelo added, "San Francisco's expungement of cannabis convictions is something that should be a standard part of every single cannabis reform legislation moving forward."

For full interview click here.