缅北轮奸

After briefly faltering a year ago, California’s massive cannabis industry seems to be regaining steam.

Cannabis sales in the Golden State are expected to reach nearly $3.1 billion this year, a report released today shows.

The report, California: Lessons from the World’s Largest Cannabis Market, looks at what can be learned from the launch of adult-use sales less than two years ago in the world’s largest cannabis market.

Following an unexpected downturn in the California market in 2018, rapid growth resumed, and now sales are on track to hit $7.2 billion in 2024.

In fact, legal cannabis spending in California will achieve a 19% compound annual growth rate through 2024, which would make the state’s marijuana market 40% larger than Canada’s and 253% larger than the next-largest U.S. state (Colorado).

The report’s chief author said the word “opportunity” should be the take-home message found in this report for insurance professionals interested in the cannabis business.

The author believes that not only do sellers of products and services like insurance have an opportunity tap into a growing business sector, but that it’s a sector with the potential for even more rapid growth if a few things change.

“We’re talking about the opportunity for insurance companies to find companies that are growing at 19 percent annually, and that’s rare,” said Tom Adams, editor-in-chief of Arcview Market Research and managing director of BDS Analytics. “I think that’s the minimum you’re going to see in California.”

The report outlines how the state’s cannabis market could become even bigger than expected.

California was the first to legalize medical cannabis with the passage of the Compassionate Use Act of 1996.

The market grew to nearly $3 billion in annual spending by 2017. And then in 2018, California became the first state to shrink its legal cannabis industry. That was the year the state allowed all adults to legally buy marijuana.

Annual legal cannabis spending in the state slid to roughly $2.5 billion in 2018, which the report blames on “burdensome regulations and taxes,” and “recalcitrant or unprepared county and city authorities.”

Immediately after adult use became legal, the California cannabis market got a quick boost when consumers rushed to dispensaries amid the “hoopla of long-awaited legalization,” but many of those buyers soon returned to illicit sources when they saw the after-tax prices of the product, which were reflective of the 77% tax-and-regulatory load, the report shows.

The legal market represents just over 54% of the overall cannabis spending in the state, while states with “more supportive” regulatory environments like Colorado, Oregon and Washington, are on track to shrink the illicit sales percentage to 30% or less of spending by 2024, according to the report.

According to Adams, some of this has to do with how the state handles the legal cannabis market.

States that are taking “a more relaxed approach” to regulating the industry are poised to fare much better with lower taxes and more streamlined processes for cannabis businesses compared to California, which is “over-regulated in almost every way,” Adams said.

Adams described a “complex legal regime” overseeing the state’s cannabis industry that includes more than 20 license types and four regulatory agencies, while the cost for cannabis businesses to get licensed in California are at the “high end of range.”

Perhaps the biggest drag on growth for the state’s cannabis market, and a big incentive for consumers to turn to the illicit market, are taxes, according to Adams. Sales taxes can add up to 10 percent on purchases depending on which city or county a dispensary is in, not including a 15 percent excise tax, while states like Oregon have no taxes on cannabis.

“It’s really the taxes,” Adams added. “The legal industry is at a huge disadvantage with competing with the illicit industry.”

Other noteworthy findings in the report include:

• The average consumer in California is 44 years old.
• Younger generations consume at higher rates, with 39% of Gen Z and millennials and 41% of Gen X reporting consumption in the past six months, compared with just 20% of Baby Boomers and older generations.
• California’s consumers also skew toward being male and more highly educated than the average resident, with 63% of past-six-month consumers being male, and 43% of consumers holding a college degree or higher.
• A higher proportion of consumers report consuming cannabis for recreational than for medical purposes. 71% reported that they consume for recreational or social reasons, while 59% consume for health or wellness reasons, while many report consumption for both medical and recreational purposes.
• The most common reasons that Californians report for cannabis consumption are to relieve pain, relax and assist with sleep.
• California’s medical-use market helped establish many of the product mix trends seen in other states, with concentrates and other manufactured products becoming increasingly popular compared to raw flower.

While cannabis is technically legal in California, most municipalities don’t allow sales. Three-quarters of local jurisdictions have banned commercial sales, according to a study in May.

The BDS report out today shows that nearly 40% of the state’s population lives more than 60 miles from the closest storefront retailer.

Since delivery is legal across county lines, that won’t stop people in areas where it’s banned from buying cannabis, it only prevents sales tax dollars from going to those local government entities, Adams noted.

He believes as local authorities begin to recognize that fact, more of them will begin lifting those bans to cash in on tax revenue.

“This is one of those matter of time things,” Adams said.

First-quarter 2019 state tax proceeds were nearly twice first-quarter 2018, leading Gov. Gavin Newsom’s administration to predict excise tax revenue to total $288 million for 2019 and $359 million for 2020, the report shows.

A quick tipping point that would change the minds of many local governments on cannabis would be if the federal government changes direction removes marijuana from the list of Schedule I drugs. Efforts to do that continue to be made. Two bills that would legalize and tax marijuana at the national level were introduced in Congress in late July.

“I think at that point, that would be wake up call to a lot of (local) regulators,” Adams said.

Related:

• Clarifying Law Around Insurance of Marijuana Act Would Reduce Gaps, Expert Says
• Democrats File Bills in House, Senate to Legalize, Tax Marijuana
• Big Cannabis Bills That Await California Lawmakers Include Banking and Hemp Products

Topics California Legislation Cannabis