A recent report by Marijuana Business Daily, in partnership with HDL Companies, has found that California sold $845 million in medical marijuana sales over a recent 12-month period.
California’s medical marijuana dispensaries had $845 million in medicinal cannabis sales between April 2015 and March 2016, according to a recent report from Marijuana Business Daily. California’s medical cannabis industry easily dominated even the second-largest medical marijuana state, Colorado, which had $408 million in sales last year.
“The figures offer a snapshot of the size and scope of California’s massive medical cannabis market, though actual sales are likely much higher because of the unregulated nature of the industry in the state,” reads the report.
California was the first state to legalize medical marijuana in 1996. As of now, however, it doesn’t have statewide regulations, which means that sales and tax collection numbers from dispensaries aren’t officially tracked. Reports on the size of the state’s market, therefore, have been strictly estimated up to this point.
For Marijuana Business Daily to calculate California’s medical marijuana sales, it partnered with HDL, which has access to approximately 98 percent of sales tax receipts from all California businesses through the State Board of Equalization database. Proprietary algorithms were used to analyze the receipts and identify dispensaries. The sales tax data from the identified dispensaries was then converted into gross receipts and the total revenue generated was summed.
While the $845 million in sales over 12 months is impressive, David McPherson, principal at HDL Companies, suggests that the figure is lower than the reality of the market’s value. He suspects that many dispensaries located in cannabis unfriendly communities could be under-reporting sales for fear of raising “red flags” to county officials. Marijuana Business Daily notes that in a couple of counties, including Orange County and San Bernardino, the calculated average per-dispensary sales are inadequate for covering the employment, facility, and inventory costs associated with running a dispensary.
Despite only having established medical marijuana laws, California is the largest state cannabis market in the United States. The state has 528 dispensaries, according to Marijuana Business Daily, giving it 10 percent more than all other medical marijuana states combined as of March.
Though the industry is unregulated at the moment, the state will soon have a highly regulated medical marijuana program. Last year, Gov. Jerry Brown signed the Medical Cannabis Regulation and Safety Act, a collection of three bills that together create a comprehensive state licensing system for the commercial cultivation, manufacture, sale, transport, distribution, delivery, and testing of medical cannabis. The state is expected to implement the new regulations January 2018.
California’ legal cannabis market could soon balloon even further, as this November voters will have the opportunity to legalize recreational marijuana. Proposition 64, if passed, will legally allow adults 21 and over to possess and transport up to one ounce of marijuana and grow up to six plants for personal use. A recent report from Arcview Market Research and New Frontier estimates that with legal recreational marijuana, the state’s marijuana market could be worth $6.46 billion by 2020.
You can read more on Proposition 64 in our recent article about this coming election’s marijuana ballot initiatives. Learn about the current cannabis laws in California by visiting our education page.