After a slow start to legal cannabis, California is on track to make a record $3.1 billion in legal cannabis sales this year, making it the biggest legal cannabis market in the world.
Legal sales are up from the roughly $2.5 billion in 2018, the first year of legal recreational cannabis in California. The state collected $345 million in cannabis tax revenue last year, far short of the $1 billion mark analysts estimated before legal sales began.
“Despite the burdens imposed on the legal market by regulators, with a $2.7 billion gross domestic product, California has the world’s largest legal cannabis market and will continue to be until federal legalization makes it merely a part of the larger U.S. market,” said Arcview CEO Troy Dayton said.
Legal cannabis spending in California will achieve a 19 percent compound annual growth rate through 2024, which would make the state’s legal cannabis market 40 percent bigger than Canada’s market and 253 percent larger than the next biggest state (Colorado). Analysts predict legal cannabis sales will reach $7.2 billion by 2024, but illegal sales will reach $6.4 billion.
Although the legal cannabis market is the biggest in the world, California’s black market for cannabis is even bigger due to various tax and regulatory issues. An estimated $8.7 billion is expected to be spent in the illegal market this year, more than double what is estimated to be spent in the legal market. The report predicts the illegal market will make up 53 percent of cannabis sales in 2024, while other states’ black markets are expected to drop to below 30 percent in the same time frame.
“The illegal market is competitive because legal marijuana is so expensive to produce under Prop. 64,” said Dale Gieringer, director of Cal NORML.