California Sold Less Marijuana in 2018 Than 2017 Despite Recreational Sales

When a state legalizes recreational marijuana, usually that means cannabis sales increase since everyone can now buy it. You don't really have to be an economics expert to figure that out. However, that was not the case last year with California.

The state of California had less marijuana sales in 2018 than 2017 despite allowing legal recreational cannabis sales last year. California had around $2.5 billion in marijuana sales last year, about half a billion dollars less than in 2017 when they only had a medical marijuana market.

There are two reasons why this happened. The first is prices. The price of marijuana in California, and other legal states as well, has dropped dramatically in the past few years, and continues to decline. So California dispensaries are selling the same product at a fraction of their previous prices, which definitely hurts final sales numbers.

But the biggest reason is customers. California has had a difficult time convincing people to abandon the black market in favor of the legal recreational one. Even with declining prices, it's still often cheaper for consumers to buy marijuana illegally due to state taxes and other fees. Or it's often simply more convenient to buy it illegally, since many cities and towns in California have a ban on recreational sales, meaning people who want marijuana have to drive long distances to get it. Isn't it easier to simply get it from your neighborhood pot dealer?

So with a decline in prices as well as an inability to attract new customers, it isn't too surprising that California's marijuana sales are down. The question is how will California address this. Will they decreases taxes and fees for consumers? Will they force local governments to allow marijuana sales? Or will they simply shrug their shoulders and hope everything changes eventually.

(h/t New York Times)

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