Medical cannabis sales in California have soared over the past five years. Rising from a reported $351 million in 2010 they reached nearly $814 million in 2015.
Much of that growth occurred in 2015, with reported sales via dispensaries soaring more than 40% from the previous year.
With a five-year compounded, annual growth rate of 18.3% California’s MMJ market continues to expand. This rapid growth occurs despite a host of challenges, including crackdowns on dispensaries in Los Angeles and outright bans in other areas.
This data was obtained via a partnership with HDL Companies. They contract directly with nearly every county throughout the state to analyze sales tax receipts.
Actual sales numbers are likely bigger. However, the unregulated nature of California’s MMJ market has left many dispensaries operating in legal gray areas – avoiding further taxation and scrutiny by under-reporting sales.
Despite potential under-reporting, these figures still reveal just how rapidly the state’s medical cannabis industry has grown.
In just the past two years – from 2013 to 2015 – California’s MMJ market has grown by $370 million, an 83% increase. In fact, this two-year period accounts for 80% of all sales growth occurring in California over the past five years.
While other states posted larger year-over-year sales gains, California’s market is more mature. This means it does not allow for the kind of astronomical growth found in smaller markets. Consequently, the five-year, $463 million in absolute dollar growth is the more notable figure.
Several possible reasons for the recent growth:
- An Aug 29, 2013 memo by a DA General de-emphasized the prosecution of marijuana businesses and individuals in compliance with state laws. This provided reassurance that neither would be pursued by federal authorities.
- In late 2014, it became clear that a statewide framework to license and regulate marijuana business in California would pass through legislature. As such, dispensaries received strong incentive to show compliance with state and local laws. This resulted in more accurate reporting of MMJ sales as any dispensary operating outside existing laws became ineligible for a future license.
- Also, the arrival of MMJ delivery services and the increased prevalence of crowdsourced platforms have made MMJ more easily accessible to a larger customer base.
Keep in mind, the past two years of growth occurred on the heels of a federal crackdown on California dispensaries. In fact, in 2011 and 2012 over 500 operations got shut-down. Driven by a lack of regulations at the state level, the federal intervention suppressed sales and created an unstable business climate in California. This was eased by the 2013 DA General memo.
California’s marijuana industry will almost certainly remain volatile in the short term. The impending regulatory reform will shake up the existing market. Plus, the possibility of recreational legalization will have a profound effect on businesses across the state.
Furthermore, the data clearly shows a large market with the potential for additional growth; providing motivation for marijuana business owners to roll with the punches.
Speaking of rolling with the punches, it’s time for cannabis trimmers to buckle up and get ready for 2017. Commercial bud trimmers unite; it’s going to be a ride!
Michael Garay ~