Mar 1, 2023 - News

California faces sluggish legal cannabis sales

Cannabis store in California

Cannabis store in Sylmar, Calif. Photo: Frederic J. Brown/AFP via Getty Images

Retail cannabis sales in California declined last year for the first time since becoming legal in 2018, according to data released last week.

Why it matters: Experts say the revenue decline is the result of deep-seated issues with the state's legal weed market and the voter-approved Proposition 64, which promised all adults in California access to safe cannabis.

Details: California's $5.3 billion in legal pot sales in 2022 was down 8.3% compared to the prior year.

  • In San Francisco, cannabis sales dropped from $260.6 million in 2021 to $228.8 million in 2022 — a 12.2% decline.

What they're saying: Seeing cannabis sales level out in California was expected, but not so soon, Hirsh Jain, a cannabis consultant and the vice chair of the California Cannabis Chamber of Commerce, told Axios.

Yes, but: Other markets like Washington and Colorado saw sales declines as well in 2022, indicating broader economic factors could be at play, Nicole Elliott, California’s director of the Department of Cannabis Control, told Axios.

  • Elliott also noted that California's legal cannabis sales "grew substantially between 2020 and 2021" — 23% according to state data.

Zoom out: The legal marijuana market in the U.S. has tripled over the last three years and is now worth roughly $64 billion, according to a recent study by Coresight Research.

Between the lines: California's sluggish performance last year could be a function of the state's relatively low number of cannabis retail stores per capita, Jain suggests.

  • A recent report by the cannabis site Leafly shows only three legal dispensaries per 100,000 residents in California. In comparison, smaller states like Oregon and Montana have 19 and 39 stores per 100,000 people, respectively.

Be smart: Because Proposition 64 requires local governments to opt in, recreational cannabis sales are still blocked in over half of the cities and counties across California.

  • And, even when cities give the green light, local approval processes can cause years of delays for retailers trying to open their stores.

What we're watching: Making changes to California's cannabis industry is poised to be a top issue among state lawmakers in Sacramento with dozens of bills submitted on the topic this legislative season.

avatar

Get more local stories in your inbox with Axios San Francisco.

More San Francisco stories