California
In the late ‘90s, California became the first state home to a legal cannabis market and in many ways those early legal operators helped shape the industry as it is today. In spite of those early pioneers, California’s recreational market has fallen short of industry expectations. Market participation and sales are remarkably smaller than analyst projections and the recent reveal of Chinese pesticides commonly found in flower leaves many questioning if legal sources are safer than those in the Black Market.
Rec-sales launch
January 1, 2018
Total sales
$26,632,897,712
2018 – $1,573,474,831
2019 – $2,855,558,606
2020 – $4,704,325,476
2021 – $5,780,494,429
2022 – $5,393,167,231
2023 – $5,174,042,117
2024 – $1,203,751,906
Total active licenses
9,129
Cultivators – 4,837
Retailers – 1,221
Distributors – 1,211
Manufacturers – 676
Delivery – 411
Microbusiness – 396
Nursery – 302
Event – 43
Testing – 31
Market in crisis
California’s cannabis market has yet to make good on its massive potential. The state has been home to the highest annual sales of any recreational cannabis market with more than $5 billion sales annually for the past three years, but in that same span of time California had the lowest per-capita sales of any recreational market, according to Anada Strategy CEO Hirsh Jain.
According to Jain, if California were operating at the same level of the cannabis markets in Michigan or Montana, it would actually see annual sales of $13 billion.
Sales data for the Golden State was largely speculative until the California Department of Cannabis Control allowed public access to the state’s sales dashboard in February.
In addition to the lackluster sales numbers, tests conducted by the LA Times and WeedWeek have found contaminants in flower from 25 out of 42 licensed producers that exceed the state allowance for cannabis and even the federal allowance for tobacco and include chemicals tied to cancer, liver failure, thyroid disease and numerous harms to unborn children.
Operator graveyard
Since the launch of adult-use cannabis, California has accrued more inactive licenses than active, including 1,522 medical licenses, 5,849 adult-use licenses and 2,228 combination adult-use and medical licenses. Of the 9,770 inactive licenses, 1,220 were cancelled, 6,670 expired, 78 were limited operations, 49 were not in operation, 165 were revoked, 1,538 were surrendered and 50 were suspended. Cultivators make up the largest share of inactive licenses at 6,576, (meaning that only 42% of issued cultivation licenses are active in 2024), followed by 1,045 distributors, 808 manufacturers, 402 delivery and 233 retail.
The state is owed more than $730 million in back taxes; however, it will not likely collect the total amount because the majority of debt is from closed businesses, according to data from Green Market Report.