Cannabis sales are booming in Nevada. In California, however, they are disappointing. Actual sales do not equal estimations. Nevada opened its recreational marijuana market officially in July last year, while California only opened its shops on New Year’s Day. Despite California selling notably more legal pot than Nevada does, its sales are significantly lower than projections, yet Nevada’s are clearly higher.
Good news first: The first nine months of Nevada’s fiscal year, from July last year to March this year, found taxable weed sales totaling $386 million. Of this, nearly $305 million came from recreational sales alone. March sales broke records, totaling just over $41 million. The state, through March, enjoyed a $49 million tax generation, which is a whopping 97 percent of its annual $50.32 million estimation.
Now the bad news: Recreational weed sales are not doing well in California. The latest projections, which the intelligentsia compares current sales to estimates to get, will only amount to approximately half of initial predictions. According to New Frontier Data, an analyst firm for the marijuana industry, California sales will only total $1.9 billion this year, exactly half of its first $3.8 billion estimate.
In speaking to the Los Angeles Times, CEO of New Frontier, Giadha Aguirre De Carcer, blamed strict regulations governing cultivators, manufacturers, distributors and retailers for this failure, in combination with low rates of authorization by many cities across California. Out of all 540 cities in the state, only 30 percent are allowing commercial cannabis businesses to operate in their jurisdictions.
The effect of this is perhaps unsurprising to most. Consumers are instead doing what they have always done, which is to buy their weed on the black market, where there are no taxes making weed unaffordable, and where illegal dealers undercut legal prices with astounding ease. It is simply cheaper and more convenient for people to buy marijuana unlawfully, bypassing heavy regulation altogether.
According to the deputy chief of the Los Angeles Police Department, probably as many as 200 to 300 stores are operating illegally across the city. Back in February, the same department shut eight illegal weed shops down. In the first quarter of 2018, the state collected around $33.6 million in taxable sales, practically guaranteeing that it will never reach its projected six-month goal of $175 million in revenues.
Currently, the estimated markets for California, both its legal and illegal ones, total approximately $7.8 billion. Medical marijuana sales make up approximately $2.3 billion of that total. If the legal industry only accounts for roughly $1.9 billion of this total, then the illegal market is easily responsible for generating $3.6 billion in untaxable revenue. Unlawful sales are making millionaires aplenty.
To add insult to injury, this figure for the illegal market is only for sales occurring within the state. California is also a top exporter of marijuana, shipping tons of it across state lines, illegally, of course. Californian residents consumed roughly 2.5 million pounds of pot, most illegal, back in 2016. It produced well over 13.5 million pounds. This means that illegal, out-of-state buyers purchased 11 million pounds.