California Cannabis Sales Dip to Lowest Mark Since 2020 Q2
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California Cannabis Sales Dip to Lowest Mark Since 2020 Q2

The sales downtrend for the state’s legal market comes as state regulators licensed a record number of retailers in the first quarter of 2022.

June 1, 2022

Editor's note: This article was corrected June 2 to reflect that California adult-use retailers have reported roughly $15.56 billion in sales since 2018. 

While there’s no sign that fewer Californians are using cannabis, taxable sales hit a seven-quarter low during the first three months of 2022.

California still remains the largest legal cannabis market in the world, but its footprint shrunk to roughly $1.17 billion in adult-use taxable sales in the first quarter of 2022, according to data released last week from the state’s Department of Tax and Fee Administration (CDTFA).

That $1.17-billion figure represents a 9.9% decrease from the previous quarter and an 18.4% decrease from the second quarter of 2021, when adult-use taxable sales peaked at $1.43 billion.

In California, taxable sales include cannabis products (such as a grinder) and other retail sales of tangible personal property (such as a T-shirt) on top of the actual cannabis sold by adult-use retailers.

The recent sales dip comes as those participating in the legal market continue to have one hand tied behind their backs by a bevy of issues that have kept the industry from performing at its full potential.

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The sales dip also comes as California’s Department of Cannabis Control (DCC), which was established July 12, 2021, by consolidating three former state cannabis authorities, has made recent advances in licensing cannabis retail operators.

In the first quarter of 2022, DCC officials issued 80 dispensary, 50 delivery and 16 microbusiness licenses. In less than a year, DCC has increased California’s active retail footprint by more than 20%. 

But that expanded retail access was not reflected in total sales, as prices and consumer participation in the legal market remain volatile.

Also in the first quarter of 2022, CDTFA reported $293.5 million in total state tax revenue generated from the legal adult-use cannabis market, including $156.4 million from the state’s 15% cannabis excise tax, $104.5 million from the state’s 7.25% sales tax, and $32.7 million from the state’s weight-based cultivation tax. The cannabis tax revenues reported by CDTFA do not include locally imposed taxes collected by cities and counties.

That $293.5-million total tax figure also hit a seven-quarter low, representing a 7.3% decrease from the previous quarter. Since January 2018, the total cannabis tax revenue to date is $3.76 billion.

Also since the 2018 launch, adult-use retailers have reported more than $15.56 billion in sales.