Chart: California lags other adult-use markets in per-capita marijuana sales

While California has the potential to be the largest legal cannabis market in the world, the state still lags other recreational markets in per-capita sales – due in large part to the continued prominence of the illicit marijuana market and restrictive regulations.

California’s per-capita cannabis sales by the second year of operations only added up to $70 per customer. By comparison, Year two per-capita sales in Colorado were $99, Oregon’s were $97 and Washington state’s $89.

If California’s market was more on par with the performance of these other state cannabis markets, it likely would have seen an additional $1 billion in sales in its second year.

The discrepancy can be attributed to many factors, including:

  • The strength and resilience of the illicit market in California, which continues to capture a significant amount of consumer cannabis spending.
  • Price differences between legal and illegal cannabis. The illegal market is not subject to the 30%+ retail tax rate consumers pay in most cities nor the $9.65 per ounce tax on wholesale adult-use cannabis.
  • Limitations set by California municipalities on where cannabis businesses can operate.

If the legal marijuana market in California can overcome these hurdles, there’s a significant runway for sales growth.

Because the state and local tax rates remain sky-high, legal retailers simply cannot compete on price with the illicit market.

One Los Angeles cannabis retailer, for example, said that even though he’d seen an uptick in foot traffic in January after California-based online advertising giant Weedmaps stopped advertising for unlicensed marijuana shops, his average customer purchase amount had nose-dived – meaning that the increase in customers was almost a wash when it came to actual store revenue.

Several cities and counties, including Oakland and Monterey County, have already lowered taxes in response to industry outcries and warnings that high cannabis taxes in California are keeping the underground market alive.

It remains unclear how effective these steps will be in the long run.

John Schroyer can be reached at [email protected]

Eli McVey can be reached at [email protected]

2 comments on “Chart: California lags other adult-use markets in per-capita marijuana sales
  1. Rod Gass on

    John, your article affords the opportunity to explain the other side of the story. Thanks.

    “While California has the potential to be the largest legal cannabis market in the world,”
    “While California is the largest cannabis market in the world.”

    California seems intent on rewriting the physics of the cannabis market. Ignore the potential instead look at the carnage from blood in the area over “legalization”. Taxation and punishment is still failing because it has to. Too many innocents have been mistreated and scarred for life. Nobody voted for that.

    We need another ballot initiative in order to correct this problem. $64 is wrong in most every aspect of Cannabis Control. In the part of California where 70% of the population can’t cultivate nor trade, $64 is a social joke. It’s merely the newest set of prohibitive restrictions set onto the people who don’t need the punishment. The result is crime and corruption beyond expectations. My local controllers are as money hungry as any politician can become. My LEOs are still booted-up in their military assault outfits. Their training is still … shoot and then investigate. Otherwise arrest everyone. Not in America we don’t.

    Reply
  2. Michael Flynn on

    I agree with you Mr. Gass. I refuse to pay 30% tax. I am relatively certain alcohol is not taxed anywhere near that figure. Looks like the bribes need to be upped or directed to the proper authorities. Do they think we are all idiots? How about if I shop underground and I’ll donate the tax to my favorite charity, Tokers Against Kids in Cages.

    The thought of putting my medical care in the hands of the federal government really scares the hell out of me. What could go wrong? Ask our vets.

    Reply

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