North Bay Business Journal: California cannabis tax revenue declines — again

EXCERPT:

Total cannabis tax revenue for the state has dropped 11% to $237.4 million in the first quarter. The double-digit drop shows an ongoing downward trend in all categories, prompting operators to pivot to other businesses or activities.

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Excise tax revenue — a per-unit rate —was also down to $140.6 million, according to the California Department of Fee Administration, the agency that tracks the revenue. Also collected at retail cash registers, sales tax revenue plummeted to $96.7 million. That’s $13 million less than sales tax revenue of the first quarter 2024.

“This is a full-blown warning sign, not a seasonal low. Operators are saying they can’t compete with high taxes. The situation is dire. Retailers are dropping prices in order to compete,” said Amy O’Gorman Jenkins, a state lobbyist and executive director of the California Cannabis Operators Association.

Shaw and Solful CEO Eli Melrod said some customers either complain or “walk out” when their products are rung up.

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“We’re well passed a warning sign,” said Tiffany Devitt, governmental affairs chief for CannaCraft, a Santa Rosa producer.

She cited taxable sales at a 5-year low from 2021’s $1.6 billion. Taxable sales — which measures total cash receipts —dipped to $1 billion, from $1.2 billion recorded in 2024 for the first and fourth quarters. State tax receipts show 15 consecutive quarters of declining revenue.

“It was a warning sign 12 quarters ago. This is an industry imploding,” DeVitt said.

READ THE FULL ARTICLE: California Q1 cannabis tax revenue down | The North Bay Business Journal