California’s cannabis industry appears to be taking an abrupt nosedive based on licensing statistics released this month from the state.
According to reports of declining sales, lower than anticipated state cannabis tax revenues and growing unpaid industry taxes bills, California’s Department of Cannabis Control license database now shows only 8,503 “active” business permits as of Feb 18 compared with 10,853 licenses that had either expired, been cancelled, surrendered or otherwise no longer exist compared with 10,853.
Since the newly regulated recreational market opened its doors to customers in 2018, inactive licenses have outnumbered those still operational, according to SFGate’s reports.
Jonatan Cvetko, executive director of United Cannabis Business Association and SFGate contributor, declared California’s regulatory framework an outright failure.
“We have finally reached a tipping point where the number of participants who have entered this industry who have failed outnumber those who are succeeding – although “succeed” might be too strong a word for such an accomplishment,” Cvetko explained to The Baltimore Sun newspaper.
Cvetko reported that when Proposition 215 still loosely governed medical cannabis prior to 2018, in its gray market days of medical cannabis before 2018, industry estimates suggested up to 100,000 operational companies. Unfortunately, exact figures could be hard to come by since there wasn’t an authoritative database like there is now.
“California destroyed our industry,” Cvetko stated. In response, David Hafner from DCC countered by noting the number of inactive licenses far outnumbers companies which have gone out of business due to having multiple permits held at once by some growers; some even held multiple permits during its early days before eventually relinquishing most back to California for disposal.
“Inactive cannabis licenses do not represent an accurate picture of the health or regulation framework surrounding cannabis,” Hafner told SFGate.
Hafner noted that 1,071 cannabis cultivation licenses became redundant following a change to allow the department to issue “large” grow permits.
SFGate reported that most unused permits – approximately 7,100 – related to cultivation have now gone unused, as reported. Furthermore, over 1,100 distribution licenses, nearly 500 delivery licenses, and 300 retail licenses remain active, the outlet noted.
Under California’s legal marijuana market, active permits include:
There are 1,225 storefront dispensaries and 330 delivery operations within four state jurisdictions with 4,741 cultivation licenses held by 638 manufacturers, 371 microbusinesses, 992 distributors, 28 testing labs and 39 event organizers within California and Nevada alone.