Now with lockdowns and stimulus checks a distant memory, inflation is also adding to the decline. Pablo Zuanic, an analyst at Cantor Fitzgerald who covers cannabis, believes that mature markets like California experienced a revenue boost in 20 thanks to Covid-19. As New York builds its legal market, the state’s gray and illegal cannabis economy has run rampant, thanks to little enforcement of unlicensed dispensaries in New York City and a never-ending stream of cannabis coming from California.īut not everyone views the decline in California’s cannabis sales as a harbinger of greater turmoil in the industry. The marijuana economy has long had varying shades of legality as operators cross over from the illicit market to the legal market-and vice versa. The connection between California growers and New York’s market is a well-worn path. “No longer is this just rogue ghost distributors,” the investor says of the shipments of California cannabis leaving the state, “brands are now embracing it.”

Legal companies are sending product to other states, particularly New York, in an effort to make ends meet. So instead of a bifurcated market within the state-one with legal and illegal operators-there is more interplay between the two. “But without federal legalization, I don’t know how we fix our supply-and-demand problem.” MORE FROM FORBES The Pinocchio Of Pot By Will YakowiczĪn investor with positions in California and other states says that he is seeing greater exporting of cannabis from the Golden State, which is a federal crime. “We are already getting orders for this season,” he says. The cannabis surplus has led to a price war in the legal industry and intense competition from the illicit market.Ĭasali says he’s hopeful as demand for this upcoming season is already strong. Since 2017, the year before legal recreational sales began in the state, and through last summer, the wholesale price of cannabis in California is down over 50%, according to New Leaf Data Services, an institutional-grade wholesale price tracker.Īll of this means that California-which only has about 1,000 legal dispensaries for its 40 million residents-grows far more cannabis than can be legally consumed within its borders. The wholesale price in California is currently around $665 a pound, which is down 26% year over year, according to Cantor Fitzgerald. The main factor behind his rolling paper-thin margins is that the price per pound of weed has plummeted. Despite selling all of Huckleberry Hill’s product in 2022, Casali posted a $50,000 loss for the year.

Golden state farms weed