By Tom Adams, CEO Global Go Analytics
Growth is inevitable in legal cannabis markets, as a worldwide $200-billion legacy market moves regulated channels. But results will vary as regulators in each new market experiment to find the right formula for free and legal – but taxed and licensed - markets.
The first US states to allow sales to all adults have decisively shown that liberal licensing of storefronts and lower tax rates both help to increase sales in adult-use cannabis markets, and hence shrink the legacy market. Of the states that fully legalized cannabis in the early-to-mid-2010s, Colorado and Oregon have the most liberal regulations in these regards. In Colorado, the tax rate for cannabis is 15% and there is roughly one dispensary per 13,500 citizens while Oregon has one dispensary for every 5,600 citizens and a tax rate of 20%.
Both states have achieved very high sales, according to estimates from The Brightfield Group. In 2020, per capita sales in Colorado reached $303 while they hit $230 in Oregon. For comparison, California, which did legalize adult-use slightly later than these states in 2018 but also started with an extremely robust medical program, had just $104 in per-capita legal sales in 2020. Much of this can be attributed to the lack of dispensaries – just one for every 54,600 citizens. California’s effective tax rate ranges from 23-38% and thus drives many consumers toward the legacy market for both easier access and lower prices.
The industry experience in Washington—which also went adult-use legal in the middle of the 2010s—illustrates that more liberal licensing of store locations may be the more important factor, but only to a point. With one dispensary per 13,149 residents, Washingtonians spent $184 per capital according to Brightfield, well above California spending levels. But the state has a 37% effective tax rate, which has kept per capita spending well below those seen in Colorado and Oregon.
Four-State Comparison |
|
|
|
|
Stores/Capita |
Effective Tax Rate |
Spending/Capita |
Colorado |
13,553 |
15% |
303 |
Washington |
13,149 |
37% |
184 |
Oregon |
5,620 |
20% |
262 |
California |
54,611 |
23-38% |
104 |
The tax and regulatory issues driving success (or hindering it) in markets in the US, Canada and around the world are comprehensively outlined in “FTI Consulting/Global Go Annual Report on Cannabis Law & Markets”, a 400-plus page report just published by Global Go Analytics.
Más contenido sobre cannabis en Español en El Planteo.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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