California’s New Marijuana Database Shows The Legal Market Is Smaller And Weaker Than We Thought (Op-Ed)

“California is less than a $5 billion market today (and shrinking). The state has, by far, the lowest per capita sales of any mature cannabis market.”

By Hirsh Jain, Ananda Strategy

In late February, well into the seventh year of adult-use cannabis sales in California, the Department of Cannabis Control (DCC) announced to some fanfare that it had launched a set of “interactive data dashboards,” which it said would allow the public to view information on harvests, retail prices, sales and licensing in the state’s cannabis market.

Following a private DCC briefing with cannabis industry reporters, some reported that with the launch of the new dashboards “state regulators have…changed the game.”

Upon closer inspection, it became clear the DCC was (very belatedly) doing what cannabis regulators in most states have done soon after their markets launched: provide the public with basic, regularly updated data on the state’s cannabis market, arguably one of the more basic responsibilities a regulator has. Further still, the DCC acknowledged that its new dashboards were missing data from 2018, 2019 and much of 2023, and would only be updated quarterly, not monthly as in many other states.

Its obvious limitations aside, the DCC’s dashboards did publicly expose a now irrefutable truth: the (legal) California cannabis market is much smaller and weaker than we thought. Per the DCC, California did just $4.9 billion in legal sales in 2022, and was on pace to do far less in 2023. Often mistakenly described in the media as a “$6 billion cannabis market,” California is in fact less than a $5 billion market today (and shrinking). The state has, by far, the lowest per capita sales of any mature cannabis market. If California’s legal market was simply performing on par with Michigan’s or Montana’s, it would be generating a staggering $13 billion in annual sales.

One of the major drivers of California’s struggles is a highly punitive, multi-layered tax system which prices most cannabis consumers out of the legal market. This system regards the legal cannabis industry as a “piggy bank” meant to subsidize specific favored non-profits and interest groups, which in return provide political support for the state’s elected leaders. Unsurprisingly, there is often limited accountability from those leaders in how this cannabis tax revenue is spent.

Despite repeated evidence that this tax system is fueling an increasingly violent illicit cannabis market in California that puts the state’s residents at risk, Governor Gavin Newsom (D) and the state legislature have demonstrated an unwillingness to antagonize the interest groups—or as the administration euphemistically terms them, “revenue recipients”—that they regard as crucial allies in their perpetual aspirations for higher office. This helps explain why California’s cannabis excise tax is set to significantly increase, from 15 percent to 19 percent, in 2025. Insanity.

Much has been made in recent months of the rise of Elliot Lewis, the Catalyst Cannabis CEO whose brash critiques of California’s regulation of cannabis have made him a social media sensation. Pearl-clutching members of California’s political class may be offended by his rhetorical style, but this misses why Lewis’s message resonates so deeply within the industry and with consumers alike. Lewis captures in plain language the hypocrisy of a political establishment that drapes itself in the rhetoric of economic and racial justice, that purports to believe in the power of cannabis as plant medicine, but that in practice cares for neither, merely using these slogans as a pretext to advance their own interests.

Faced with leaders demonstrably indifferent to the survival of California’s legal cannabis industry, Catalyst’s recent litigation against the state for improperly overtaxing “cannabis accessories” seems one of the few practical avenues to combat California’s brazen oppression of its legal cannabis businesses. The only other option may be a 2026 statewide ballot initiative to reduce cannabis taxes, entrusting the people of California to chart a better course than a state legislature captured by special interests.

Presumably, some of California’s cannabis tax revenue helped support the “many months” of work it took the DCC to develop its new data dashboards. We should welcome the DCC’s attempts (however belated) to provide a modicum of transparency. But despite the DCC’s claim that it “validated the data at an extremely detailed level to make sure that we had the highest degree of confidence in what we were displaying,” errors familiar to close observers of the California cannabis market remain.

To unpack just one example—as of February 25, the DCC’s Cannabis License Summary Report dashboard reported that there were 1,240 Retail Storefronts in California. But this data is drawn from the DCC’s notoriously imprecise License Search database, which is both overinclusive (including dispensaries that received state licenses years ago but that have never opened for business as one of California’s “1,240 dispensaries”) and underinclusive (excluding dispensaries that were established as microbusinesses from the supposed total of “1,240 dispensaries”).

Hence, the DCC’s Find Retailers Near Me tool indicates there are only nine dispensaries open in the city of San Jose, when in fact there are 14 open today. Similarly, the DCC’s Find Retailers tool indicates there are five dispensaries open in the city of Tracy, when in fact there are only two open today. Errors such as these abound in the DCC’s licensing database, casting doubt on the value of any dashboard that, however elegantly, seeks to summarize this faulty data.

Clearly, much work remains to be done to ensure that the public has confidence in the data displayed by the DCC. We should sincerely hope that some members of the large and increasingly sprawling bureaucracy that is the DCC are up to the task. The more intractable problem, however, will be getting the state’s political leaders to overcome a habit of prioritizing their short-term political interests over the interests of those that they govern.

Absent a dramatic course correction, a defining part of Newsom’s legacy as governor will be that he allowed the state’s once-promising cannabis market to descend into chaos and violence because appeasing interest groups deemed key to his political future was more important to him than the welfare of the citizens he was elected to represent. The ultimate irony is this: that may not play very well come November 2028.

Hirsh Jain began his cannabis advocacy at age 17 as the Cannabis Lead in UC Berkeley’s Public Defender’s Office. Today, he is the CEO of Ananda Strategy, a consultancy that serves many of California’s leading cannabis brands and retailers.

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Photo courtesy of WeedPornDaily.