Over taxation appears to be their problem. Pot is legal in my state and it started out and always was more expensive than illegal pot. That is why there are still sales of illegal pot here. You would think that writers of the laws would have at least some knowledge of economics.
I don't think over taxation is their problem. The state made 430 million dollars according to the article. The problem is that many areas simply do not want the businesses in their area. People seem to think that California is some liberal extreme. When you look at California macroscopically, I can understand why people think that way. However, when you zoom in close there is much diversity.
Give a business owner a pedestal to complain about taxes and they will. The fact is that business is not stifled because of taxes, rather it is stifled because lots of communities do not want those businesses to operate there. So, there are lots of areas where it is inconvenient to get pot legally. The response: People continue to illegally purchase.
It should be a lesson for libertarians. People will generally act not in accordance with what is most convenient and beneficial for them, even when doing so is not beneficial for them in the long term.