Metropolis officers in San Diego are anticipating a steep drop in tax income from hashish gross sales this 12 months, as California’s regulated marijuana market continues to face troublesome headwinds.
The San Diego Union-Tribune reported on Tuesday that “San Diego officers say they now count on hashish tax income to be 23 p.c decrease than they’d beforehand anticipated through the ongoing fiscal 12 months that ends June 30 — $19.8 million versus $25.7 million,” citing business leaders who say that “the first reason behind their ‘double-digit’ drops in gross sales is against the law supply providers, which they estimate make up about half of the area’s hashish market.”
“The authorized business is dealing with big competitors from the non-legal business,” mentioned Phil Rath, government director of United Medical Marijuana Coalition, a commerce group representing numerous marijuana dispensaries, as quoted by the San Diego Union-Tribune. “Supply providers are an ongoing enforcement problem for town.”
The plunging revenues in San Diego are symptomatic of a statewide downside in California, the place the practically seven-year-old authorized hashish market has gone bust.
In November, Politico reported that tax income from the state’s licensed and controlled marijuana market “plummeted to beneath $130 million through the third quarter, an almost $100 million drop from the identical interval final 12 months.”
“Authorized leisure and medical pot gross sales in California have constantly shrunk since peaking at over $1.5 billion within the second quarter of 2021, as licensed retailers proceed to lag behind an expansive underground market that’s estimated to be price as much as $8 billion,” Politico reported at the time. “California residents bought $1.27 billion price of licensed hashish merchandise in July, August and September, creating $128 million in excise taxes, in keeping with the California Division of Tax and Payment Administration. That represents an $18 million drop from the earlier quarter, and a $52 million decline from all-time highs.”
In a separate story that month, Politico reported that “California’s black market undermined its personal authorized business,” noting that six years after the vote to legalize leisure pot within the state, “unlawful gross sales have far outpaced the regulated market, and lots of operators have closed up store.”
“Excessive taxes, native authorities opposition and competitors from the underground market have stifled the success of the authorized hashish business within the nation’s most populous state,” Politico added.
Lawmakers and different officers all through the state have pursued options to bolster the authorized weed market.
Earlier this month, a Democratic assemblyman in California launched a invoice that may allow the state’s licensed hashish consumption lounges to serve foods and drinks, which he says could possibly be a boon for the embattled business.
“California’s small hashish companies are struggling,” mentioned Matt Haney, the lawmaker sponsoring the invoice. “Points like over-saturation, excessive taxes, and the thriving black market are hurting hashish companies who comply with the principles and pay taxes.”
In San Diego, metropolis officers “have additionally lowered their long-term projections for hashish tax income, which has been anticipated to pay for enforcement of dispensaries and a brand new hashish fairness program that goals to offer a leg up within the business to individuals of colour adversely affected by the struggle on medication,” according to the Union-Tribune.
“Simply over a 12 months in the past, long-term estimates for hashish tax income had been projected at $31.5 million in fiscal 12 months 2025, $33.3 million in fiscal 2026 and $33.8 million in fiscal 2027,” the newspaper reported. “In November, these had been revised right down to $26 million in fiscal 2025, $28.4 million in fiscal 2026 and $28.9 million in fiscal 2027. However metropolis finance officers say they aren’t assured even in these revised estimates.”