California’s legal adult use market is around eight months old. With California being the fifth largest economy in the world, revenue predictions were set proportionately high, but unfortunately, if first quarter numbers are any indication, they’re not going to be met. In fact, right now sales are hovering right around 50 percent under forecast.
Eaze just published a report titled, “The High Cost of Illegal Cannabis.” In it, they found that while people generally want to buy their cannabis legally, the high prices and taxes are keeping a good deal of them in the black market. All results from the report were based on responses from nearly 1,500 cannabis consumers.
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What Eaze found was that a 5 percent decrease in state taxes on cannabis would bring 23 percent of the population currently scoring from the illicit market into the legal one. The Fresh Toast asked Eaze Head of Policy Research, Peter Gigante, who they really wanted to have paying attention to these statistics and why.
“We know policymakers will continue to work in support of a legal, sustainable cannabis industry and we hope this Eaze Insights report will highlight avenues for them to do so,” Gigante explained, “California regulations that lead to high cost, highly taxed products deter many consumers from the legal cannabis market. Even a small decrease in the current tax rate could have a major impact on the long term survival of legal retailers.”
It may seem like a small percentage, but the results of the study were clear that nearly 1 in 4 people who currently buy outside of the legal market would switch over to buying from dispensaries with the 5 percent decrease. And if the decrease meant the increase that the Insights report suggests, then despite the drop, more tax revenue, and revenue period, would be coming in.
A problem that also arises from the black market is that anyone going there to obtain more affordable weed is thus missing out on their product being tested for pesticides, molds and other contaminants. But what does one say to the people who insist that, well, we’ve been smoking it for X amount of years now without lab testing, why make it a priority now?
Gigante looked at the question optimistically, “As the industry continues to grow in size and sophistication, consumers increasingly see cannabis products the same as any other consumer goods. Consumers evaluate based on the same standards and expect the highest quality for the lowest price, as they would for any other product.”
So in other words, pot is becoming a common commodity and as Eaze pointed out, their biggest takeaway from conducting the report was, “the rapid rate at which the normalization of cannabis continues. Cannabis consumers have long been interested in factors like price, safe access, quality and convenience, but our research also shows the wellness component is a new major factor. This is where the legal market can compete with the illicit market, as long as we create an environment where legal retailers are able to survive.”
And that’s the real deal. Retailers, compassionate care facilities, growers, distributors and bud tenders alike, all need to thrive in order to make this industry one that continues to provide an ever growing job market, with opportunities to advance and to literally grow – not to mention create tax revenue to be used for our schools, peace officers and social programs. Right now California cannabis sales may be slower than predicted, but as the right changes are put gently in place, hope flies high.