Cannabis tax revenues have declined in California year-over-year for the last four years, with total taxable cannabis sales in Q2 2024 down by a third since the same time period in 2021.
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Cannabis tax revenue in California has been on a steady decline over the past few years, according to data from the Cannabis Tax and Fee Administration (CDTFA). A report by the Press Democrat shows a year-over-year drop in second-quarter tax revenue since 2021. Here’s the breakdown:
$361.4 million in Q2 2021
$302.3 million in Q2 2022
$286.7 million in Q2 2023
$263.1 million in Q2 2024
Similarly, taxable cannabis sales in the state have followed the same downward trend:
$1.5 billion in Q2 2021
$1.4 billion in Q2 2022
$1.3 billion in Q2 2023
$1 billion in Q2 2024
The shrinking sales and tax revenue reflect challenges facing the California cannabis industry, which is burdened by strict regulations and increased competition from both unregulated cannabis products and hemp-derived THC.
In response to concerns about unregulated products, Governor Gavin Newsom recently introduced emergency rules aimed at cracking down on the sale of intoxicating hemp products. These rules require hemp-derived products sold in the state to contain "no detectable amount of total THC." The governor explained that this move is meant to protect children from potentially harmful hemp and cannabis products.
Meanwhile, California lawmakers recently passed a bill that would allow cannabis consumption lounges in the state. The proposal now heads to Governor Newsom's desk, though it’s uncertain if he will sign it, as he vetoed a similar measure last year.
The combination of regulatory pressures and competition from alternative THC products continues to reshape California's cannabis market, leading to noticeable declines in both sales and tax revenue.
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