Legal California Cannabis Market 'On The Verge Of Collapse,' While Illegal Growers Thrive, Destroying Environment

Legal cannabis sales in California are declining. The State Department of Tax and Fee Administration just posted first-quarter sales and tax figures revealing the lowest quarter for marijuana sales since the second quarter of 2020.

In the first three months of 2024, the businesses recorded $1.2 billion in taxable cannabis sales, which garnered $259.92 million in combined excise and sales taxes. For comparison purposes, cannabis sales in the first quarter of 2023 amounted to $1.28 billion, and in the first quarter of 2022 sales reached $1.33 billion. In the fourth quarter of 2023, legal marijuana sales amounted to $1.28 billion.

Los Angeles-based consultant Hirsh Jain commented on the news sales figures, pointing out that the California cannabis market is "on the verge of collapse." Jain told Green Market Report that the data is "really astonishing. Objectively, we have data that shows the California market is in decline."

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Questionable Policy Decisions

Jain also further cautioned about the tax reform approved by the legislature in 2022, which would raise the current excise tax rate from 15% to 19% starting July 2025. According to Jain, that will probably push even more companies out of legal retail.

"Not only is the market really underperforming, but California continues to make policy decisions that exacerbate the problem," Jain said.

Jain also compared California sales figures to those of Michigan, explaining that the Great Lake State is now running at $3.5 billion in sales per year, versus California's $4 billion. "It is incredible that California, despite having 40 million people to Michigan's 10 million, is in danger of being overtaken by Michigan's legal market," Jain said.

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Consequences Of Illicit Market

In addition to driving out the legal market, illicit cannabis sales have done other damages across the Golden State. The Guardian recently reported how illegal marijuana farms have destroyed once a blossoming wilderness leaving  empty space where "you're lucky to see a lizard."

According to Rick Dean, the community development director for Siskiyou's environmental health division, challenges include "the daily accumulation and disposal of human waste and garbage that is buried on site. Many are plastic containers left over from fertilizers and pesticides."

Illegal cannabis cultivation spreads across federal land and forest ecosystems and it is even sometimes linked to organized crime. And while illicit growers are facing fines if caught, the amounts are almost negligible. By contrast, legal commercial growers have to follow restrictions on the use of pesticides and chemicals and other safety protocols.

Several months after that the state governor Gavin Newsom established Unified Enforcement Task Force (UCETF) in an effort to crack down on illegal marijuana operations. Since then, the UCETF published reports on its efforts every quarter. In the first three months of 2024, the task force has seized over $61 million in illegal cannabis products, including nearly 36,600 pounds of unlicensed cannabis and eradicated over 62,000 illegal plants in law enforcement crackdowns.

The The Daily Mail's senior reporter Miles Dilworth also recently reported about homeowners who are being fined millions after being moved into properties once used to grow illegal cannabis in Humboldt County. This resulted in a federal class action lawsuit against the county.

California Police Backs Federal Reform

Meanwhile, the Peace Officer Research Association of California, an association of 950 police unions representing over 80,000 officers came in support of federal cannabis legalization and legal marijuana businesses, writes SF Gate.

"The ship has sailed," PORAC wrote in a policy position released earlier this month calling for federal cannabis legalization, "and for the vast majority of Americans, cannabis is legal and accessible."

Read now: California’s Cartel Cannabis Flourishes In National Parks: Weed Grown On Public Lands Accounts For One-Quarter Of US Black Market

Photo: Courtesy of Handatko via Shutterstock