Data released by the State of California Department of Tax and Fee Administration shows that retailers generated less taxable sales in 2022 when compared to 2021. This is despite the fact that most industry forecasters predict that cannabis sales will continue to rise through 2025. According to the data, taxable sales are down approximately half a billion dollars from $5.8 billion in 2021 to $5.3 billion in 2022. You can find data on California Cannabis Tax Revenues here.
There are many factors that may have caused this drop in cannabis sales. For starters, wholesale prices have been dropping across the state due to an oversupply of cannabis. Some analysts believe that the COVID-19 pandemic led to a consumption boost due to stimulus payments and shelter-in-place requirements across the State of California. California is also one of the more mature legal cannabis markets in the United States, and the novelty of legal cannabis may have boosted sales via cannabis tourism during the period of time where recreational marijuana was inaccessible in many parts of the country.
The fact that sales are falling is not necessarily cause for concern. The cannabis industry is still a multibillion dollar industry, and it will only continue to grow nationally. However, California may be reaching a point of stabilization and – more importantly – consolidation. We previously predicted that consolidation would be one of the major industry trends this year. So far, that has proven to be true. Many of you have come to us seeking to acquire additional licenses or to sell your companies to bigger players. We expect that to be the continuing trend for the rest of the year. We also predict that cannabis brand expansion into newer markets will continue to rise nationally. We think that this is one of the best trends to follow for cannabis businesses looking to expand into new markets.
As always, our attorney are here to sit down with you and discuss how trends in the cannabis industry affect your business. We are here to help you in good times and bad times, and to help you plan for the future. Do not hesitate to contact us today.