After California’s lackluster legalized recreational cannabis launch in 2018, a new report released by Arcview Market Research and BDS Analytics indicates the industry sales are on an upswing despite the rough start.
According to new market research, the California legal marijuana market is on track to hit $3.1 billion in sales by the end of 2019 and top $7.4 billion in sales by 2024. Regulated sales fell from around $3 billion in 2017, dropping to $2.5 billion in 2018. The dip in sales experienced by California was unique; every other state-legal cannabis market saw a post-legalization increase in legitimate cannabis spending. This information resulted in Arcview Market Research and BDS Analytics’ new report titled “California: Lessons From the World’s Largest Cannabis Market.”
California’s rough start can be attributed to a multitude of reasons, from strict product testing regulations to a robust illegal market that continues to compete with legal sales. Others blame a lack of licensing opportunities for industry operators, while others point fingers at local bans throughout the state on recreational use.
Expected tax revenues haven’t materialized as anticipated, either. In May, California officials adjusted the state’s expected tax earnings, subtracting around $233 million off forecasts.
Robust Black Market
California’s entrenched (and profitable) black market remains extremely profitable in the state. According to the report, it is expected that California’s illicit market will maintain more than 50 percent of the entire state’s cannabis sales through 2024. This is in stark contrast to the rest of the nation, where other legal states with more collaborative regulatory entities are expected to see illegal sales drop to around 30 percent of total transactions.
Troy Dayton, CEO of the Arcview Group, which released the report, said that despite the industry’s numerous burdens, “California has the world’s largest legal cannabis market and will continue to until federal legalization makes it merely a part of the larger U.S. market,” adding, “At that point, California will assume its usual place in the world economy as a major exporter of agricultural commodities and their derivative products, a technology mecca, and consumer product trend-setter.”