California’s Legal Cannabis Market Faces Downturn in Sales and Industry Challenges
LOS ANGELES– Legal cannabis sales in California have hit a roadblock as consumers purchased $5.3 billion worth of cannabis in the state in 2022, an 8% drop from the previous year, according to a report by SFGate. This marks the first downturn in sales since the state’s legal cannabis market was launched in 2018, and the dip in sales is likely due to several factors, including the state’s long-standing struggle to get a handle on its illicit cannabis market.
The unregulated and untaxed cannabis market remains cheaper than its legal counterpart, which is a major factor contributing to the decline in legal sales. As a result, the state’s legal market is on the brink of collapse, warns cannabis consultant Hirsh Jain. However, other hurdles have also contributed to this decline, including supply chain issues, depressed wholesale prices for licensed cannabis farmers, and difficulties in opening new legal stores.
The cannabis industry’s ballooning debt is also a growing concern. California’s cannabis industry generated $2 billion in revenue in its first year of sales in 2018, which grew to $5.7 billion by 2021. But now, industry insiders warn that the market contraction could have severe consequences for the industry.
Despite these challenges, legal cannabis is still a significant contributor to the state’s economy, and the state is committed to regulating and expanding its legal market. Nevertheless, the decline in sales is a stark reminder that the industry must tackle its long-standing challenges, including its illegal market, in order to continue its growth trajectory.
(This information is primarily sourced from Reportlinker. Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).
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