Cannabis sales in the state are falling for the first time in five years

California cannabis could be in trouble. The state saw an 8% drop in the amount of legal marijuana purchased by consumers compared to last year. This was the first time the state had seen a drop in sales since introducing the legal market in 2018, SFGate reported.

According to statistics from the State Department of Tax and Fee Administration, consumers in California bought $5.3 billion worth of cannabis last year. That’s down $473 million from 2021.

Photo by Olena Ruban/Getty Images

The drop in sales is likely the result of multiple factors, but the bottom line is that the “legal market is on the verge of collapse,” cannabis consultant Hirsh Jain told SFGate.

In its first year of sales five years ago, California marijuana companies sold $2 billion worth of cannabis. By 2021, this rose to $5.7 billion.

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The state has struggled for years to get a grip on its illicit cannabis market, which is probably the main reason for the decline, as untaxed and unregulated cannabis is far cheaper than legal weed and there is a large surplus of legal and illegal marijuana in the state.

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But other hurdles also played a role, Jain told SFGate, ranging from difficulty opening new legal businesses to supply chain hurdles and low wholesale prices for licensed cannabis growers. All of this has also resulted in a severe market downturn in California, along with mounting debt across the industry.

This article originally appeared in Green Market Report and has been republished with permission.