Wednesday, May 29, 2024

State Stunned As First Time In Five Year Cannabis Sales Drop

The state has struggled for years to get a handle on its illicit cannabis market, which is likely the primary factor driving the decrease.

By John Schroyer

State stunned as first time in five years cannabis sales drop. The state has seen an 8% dip from last year in the amount of legal marijuana purchased by consumers, the first time the state has seen a downturn in sales since the legal market launched in 2018, SFGate reported.  California over taxing and contributing to the healthy black market seems surprise officials when things don’t turn out perfectly.

Consumers bought $5.3 billion worth of cannabis in California last year, according to statistics from the state Department of Tax and Fee Administration. That’s down by $473 million from 2021.

marijuana money
Photo by Olena Ruban/Getty Images

The dip in sales is likely the result of several factors, but the bottom line is that the “legal market is on the brink of collapse,” cannabis consultant Hirsh Jain told SFGate.

In the first year of sales five years ago, California marijuana companies sold $2 billion worth of cannabis. By 2021, that jumped to $5.7 billion.

RELATED: This State’s Medical Marijuana Patient Count Increased 71% In Two Years

The state has struggled for years to get a handle on its illicit cannabis market, which is likely the primary factor driving the decrease, since untaxed and unregulated cannabis is far cheaper than legal weed and there’s a vast surplus of both legal and illegal marijuana in the state.

RELATED: This State Could Start Adult-Use Cannabis Sales By July Under New Bill

But other hurdles have also played a role, Jain told SFGate, ranging from difficulties in getting new legal stores opened to supply chain hurdles to depressed wholesale prices for licensed cannabis farmers. All of that has also meant severe market contraction in California, alongside ballooning debt across the industry.

This article originally appeared on Green Market Report and has been reposted with permission.

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