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California Cannabis Revenue Not Quite As High As Projected So Far

By Roger Malespin (photo istock.com/wildpixel)

In a study conducted by BDS analytics in Boulder, Colorado has concluded that consumers have bought an estimated $339 million worth of marijuana products from retailers in California in the first two months of this year, about 13% less than originally projected. California has projected that in the remaining 6 months of the fiscal year, consumers will spend $1.15 billion, or $383 million every two months. 

While this might cause some dismay among proponents of legalization, Greg Shoenfeld, vice president for operations for BDS, is not worried. "I'm not overly concerned at this point," “Cannabis sales go up significantly in March in other states with legalized sales, perhaps because of warmer weather”, Shoenfeld said. 

BDS is not a state sponsored company, so Alex Traverso, spokesman for the state Bureau of Cannabis Control, declined to comment on the BDS revenue estimates, saying the agency is waiting for the official state report on revenues. 
One of the main reasons for the revenue totals is that the legal market is still new and adjusting to the long standing illegal market, of which California is a top ten state. "Sales are happening but they're not happening in the regulated market," said Kristi Knoblich, board president of the California Cannabis Industry Association and co-founder of Kiva Confections.
The grey and black market is still bigger, with more than 6,000 dispensaries and delivery services in California listed this February on Weedmaps, which has been called the yelp of marijuana, while the state had licensed 580 dispensary and delivery companies at that time.

The state has had trouble attracting new businesses because of this, and the fact that while state tax laws are clearly defined, local taxes are left to the discretion of the community, which can rise as high as 45 percent. Local governments have the authority to ban sales in their jurisdiction, and many of those looking to get into the business cannot afford to relocate on a whim. Less than one third of California cities currently allow sales, and only 18 of 58 counties allow sales in unincorporated areas.

We must also consider the effect of decriminalization. With the penalty for marijuana violations so low, and the incentives to operate legally also low, new businesses have more reason to enter the grey or black market because of the lack of high taxes and no strong penalty should they be caught. 
Regardless of these facts, California is still the largest legal cannabis marketplace in the world and despite regulations and tax hurdles, new businesses arise nearly every day offering a wide variety of cannabis products for retail and delivery. The optimistic view will recognize the less than expected revenue numbers as growing pains for a new industry, and we have no reason to be anything but positive about the legal market in California. Experts have said that many of the new products and business have a good chance of succeeding for the rest of the fiscal year

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