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Cannabis growers exit California market, helping stabilize prices

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California cannabis cultivation capacity is down significantly from early 2022, with some growers choosing not to plant or renew their licenses because of low wholesale prices and tough economic conditions.

The reduction in canopy is leading to wholesale price stabilization – and might even result in a slight increase in pricing – following months of declining prices in the nation’s largest marijuana market, according to some industry officials.

Cannabis wholesale technology platform LeafLink reports that the total square feet of cultivation canopy in the state has dropped about 15% from a year ago, to around 68 million square feet versus roughly 80 million square feet at this time last year.

Jason Vegotsky is among those who sees wholesale prices starting to level off.

The CEO of Petalfast, an Irvine-based sales and marketing agency for the cannabis industry, said there are simply fewer players in the market, which means prices have stopped tanking and might be coming up slightly.

“I think that trend will continue over the next six months,” Vegotsky said.

“I’m expecting a really nice, second half of the year for the folks who make it through the first half.”

By nice, he means he expects businesses to have an ability to make money with margin expansion, “rather than this margin decline that we’ve seen across the whole supply chain for really the last 18 months.”

Ryan Smith, co-founder and CEO of New York-based LeafLink, believes farmers are choosing not to plant or renew their cultivation licenses because:

  • Pricing for outdoor bulk cannabis is lower than the cost of production.
  • A weak retail sector makes it difficult to sell branded products in the state.

“Put together, these factors illustrate that grow operations do not have the margin or capital runway to make it through the current ‘down cycle,’” he told MJBizDaily via email.

Other factors at play

That down cycle he’s referring to is highlighted by the wholesale flower market.

According to LeafLink data, a pound of packaged flower is wholesaling in the $1,200-to-$1,400-a-pound range compared with $1,700-$1,900 a pound at the beginning of 2022, a year-over-year decrease of about 25%-30%.

Bulk outdoor flower has remained in the $200-$400-a-pound range in the post-harvest period of fall and winter the past couple of seasons, according to LeafLink.

“California produces more than three times as much legal cannabis than the total addressable market can consume, largely a result of uncapped cultivation licenses and limited retail capacity,” Smith said.

With only 50-100 more retail locations slated to come online in the state this year, Smith expects more growers will likely have to reduce capacity to balance the market.

Other factors are at play aside from the amount of production and retail capacity.

The devastating conditions of heavy rain and wind in early January might have an impact on the supply in the near future, for one.

On the flip side: A change in the law governing cultivation could add capacity to an oversupplied market.

Effective Jan. 1, the state Department of Cannabis Control began accepting applications for large cultivation licenses.

Those licenses are for cultivation sites with more than 22,000 square feet of canopy.

Seeing stability

Some of Scott Solomon’s cultivation clients were reporting a bleak scene about 18 months ago, but the situation is improving.

The CEO at Operational Security Solutions, headquartered in Fresno, said prices started dropping “pretty hard” about a year and a half ago.

“We have a revenue model that’s based off of the volume of cash that these businesses are generating,” Solomon said. “It impacted us significantly.

“In some instances, we had clients, cannabis businesses, that said the price dropped essentially 80% across some of their products.”

According to Solomon, the pricing picture started to improve somewhat last September and has begun leveling out.

Still, businesses are building out more cultivation capacity on the potential of future growth of the industry in event of federal legalization or other reform, he said.

Solomon’s seeing more grows developing from Fresno down through Bakersfield and toward Los Angeles.

The picture is even rosier at vertically integrated California cannabis company Glass House Brands.

Graham Farrar, president of the Santa Barbara-based business, said pricing went up by about 13% from the third quarter to the fourth quarter of 2022.

“I think what’s starting to happen is that the market is rationalizing that the pricing was so low that it was destructive to everybody,” he added.

“Eventually, if you’re growing product for more than you can sell it for, you quit doing that. And we can see that happening pretty drastically.”

Farrar is quick to point out that an uptick of three or four months isn’t enough to call it a trend.

“But even to see stability at this time, I think is a positive sign,” he added.

Doom, gloom

But not everyone is seeing the situation in such a positive light.

Doug Chloupek, the CEO and founder of Juva Life, a cannabis grower and life science research company with a cultivation arm in Stockton, said the market is confused about what defines good marijuana.

“The market has been driven by influencer hype,” he added.

Consumers are paying a premium for purple flower that tastes of fuel or fruit and tests at 30% or more THC content, according to Chloupek.

“The reality is that there is some phenomenal cannabis that is just not being received by the market because the market’s too naive to know what’s actually really good,” he added.

Anecdotally, Chloupek’s seeing green flower selling for $800-$1,000 a pound wholesale, while purple flower can fetch another $100 a pound or more. He said the same flower was selling for $800 more a pound last year.

The overall cost of production, including steep taxes and regulatory fees, is one of the leading factors driving cultivators to not renew their licenses, according to Chloupek.

He said some growers are going back to the unlicensed market because they were making a comfortable living before they tried to go legit.

An illicit market grower can make $150,000-$200,000 a year and not have to worry about their margins being eaten up by taxes and fees, according to Chloupek.

“It’s kind of a doom-and-gloom picture I’m painting, which I wish it wasn’t,” he said.

“But that’s a pretty stark reality of where things are in California right now.”

Source: https://mjbizdaily.com/cannabis-growers-exit-california-market-helping-stabilize-prices/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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