Weed Sales Go Down in California

Stephen Andrews
30 Mar 2023

A lot of legal states in the U.S. reported record cannabis sales in 2022, but the same cannot be said about California. Sales declined last year for the first time since the Golden State launched legal recreational retail in 2018.

California finished 2022 down more than $470 million compared to 2021's record high of about $5.8 billion. That's a drop of nearly 8.2%, according to the figures reported by the California Department of Tax and Fee Administration. 

The decrease in sales probably comes down to various contributing factors. In 2020, weed sales in the Golden State skyrocketed by 68% as more people turned to cannabis products during the lockdowns. It may appear that now retail is normalizing after such a significant climb. 

However, industry insiders believe there are other reasons for last year's dip, including high taxes and insufficient dispensaries. Customers might be tired of paying exorbitant taxes and turn to the streets to get weed. 

Another issue might be wholesale prices of cannabis which, at $665 a pound, saw a 26% decrease year over year. Compared to 2017, the drop in wholesale cannabis price is more than half. 

And then there are the other issues that the Californian market is facing. Such as the absurdity that legal cultivators in the state grow more than can be purchased. Because the weed that's left cannot be exported due to federal laws, huge quantities end up wasted. In the meantime, the black market continues to siphon millions from legal sales. 

The overall situation in California has pushed some cannabis brands to leave the state entirely or at least downsize their operations. Colorado-based edibles maker Wana Brands was among those who pulled out of the California market completely in 2022. Most recently, the same happened with Garcia Hand Picked, the legacy brand of San Francisco-born Jerry Garcia, the late co-founder and lead vocalist for The Grateful Dead. 

The situation is particularly tough for small farmers, however, it seems it's not any easier for the industry behemoths either. Florida-based Trulieve and Massachusetts-based Curaleaf were among those who closed down some of the locations they are running in California and laid off staff in the last 12 months. 

California's drop in sales last year also contributed to a decline in tax revenue by the state. Total cannabis tax earnings fell to about $1.09 billion in 2022, nearly $25 million less than what was collected in 2021. However, a significant chunk of the revenue was lost because of the elimination of the cultivation tax for the second half of the year; still, retail and cultivation taxes revenues are both down compared to the previous tax year. 

Stephen Andrews