Chart: California medical marijuana sales skyrocket 132% since 2010

This is the third in a series of charts featuring data on California’s medical cannabis market. Marijuana Business Daily will publish additional charts in this series every other Monday until mid-November. You can view the first chart here and the second one here

By Eli McVey

Medical cannabis sales in California have soared over the past five years, rising from a reported $351 million in 2010 to nearly $814 million in 2015, according to exclusive data obtained by Marijuana Business Daily.

Much of that growth occurred in 2015, with reported sales via dispensaries soaring more than 40% from the previous year.

With a five-year compound annual growth rate of 18.3% – including periods of modest or even negative growth – California’s MMJ market continues to expand rapidly despite a host of challenges, ranging from crackdowns on dispensaries in cities like Los Angeles and outright bans in other areas.

Marijuana Business Daily obtained the numbers via a partnership with HDL Companies, which contracts directly with nearly every county throughout the state to analyze sales tax receipts from businesses.

Actual sales numbers are likely bigger, but the unregulated nature of California’s MMJ market has left many dispensaries operating in legal gray areas – avoiding further taxation and regulatory scrutiny by under-reporting their sales.

The figures, despite the likelihood that they’re under-reported, reveal just how rapidly the state’s medical cannabis industry has grown in recent times.

CA graphic

In just the past two years – from 2013 to 2015 – California’s MMJ market has grown by $370 million, an 83% increase. In fact, this two-year period accounts for 80% of all sales growth that’s occurred in California over the past five years.

While other states have posted larger year-over-year percentage sales gains, California’s market is more mature, which doesn’t allow for the kind of astronomical growth found in smaller markets. The five-year, $463 million in absolute dollar growth is the more notable figure.

Several possible reasons for the recent growth:

  • The Aug. 29, 2013, memo written by then-Deputy Attorney General James Cole de-emphasized the prosecution of marijuana businesses and individuals in full compliance with state laws, providing some reassurance that neither would be pursued by federal authorities.
  • In late 2014, it became clear that a statewide regulatory framework to license and regulate marijuana businesses in California would pass through the legislature. Dispensaries were therefore given strong incentive to show their full compliance with state and local laws, said David McPherson, principal at HDL Companies. This led to more accurate reporting of MMJ sales, as any dispensary operating outside existing laws would be ineligible for a future license, McPherson surmised.
  • McPherson also suggested that the arrival of MMJ delivery services such as Eaze – and the increased prevalence of crowdsourced information platforms like Weedmaps and Leafly – made MMJ more easily accessible to a larger customer base.

The past two years of growth in MMJ sales comes on the heels of a federal crackdown on California dispensaries in 2011 and 2012, with more than 500 closing during that time.

Driven by a lack of rules or regulations at the state level regarding the sale and distribution of MMJ, the federal intervention suppressed sales and created an unstable business climate in California – in large part eased by the 2013 Cole memo.

California’s marijuana industry will almost certainly remain volatile in the short term. The impending regulatory reform will shake up the existing MMJ market, and the possibility of recreational legalization will have a profound affect on businesses across the state.

But the data clearly shows a large market with the potential for more growth, providing motivation for marijuana business owners to roll with the punches.

Eli McVey can be reached at [email protected]

Daily News | California Medical Cannabis Business & Marijuana Legal News | Dispensary/Retail Store Business News | Featured | Marijuana Industry Data and Charts

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