Pubdate: Tue, 10 Apr 2018
Source: Sacramento Bee (CA)
Copyright: 2018 The Sacramento Bee
Author: Brad Branan


In the first two months of cannabis legalization, consumers bought an
estimated $339 million worth of marijuana products from retailers in
California, 50 percent less than state projections, according to a
leading analytics firm.

The state has estimated that retail cannabis sales for the year would
be $3.4 billion, or $570 million every two months.

BDS Analytics of Boulder, Colorado, provided the firm's data to The
Bee. Greg Shoenfeld, vice president for operations, said the company
collects sales data from dispensaries and uses statistical modeling to
project statewide sales. BDS Analytics also collects and analyzes such
data in the three other states with recreational marijuana: Oregon,
Washington and Colorado.

While this year's California figures seem to support industry concerns
about cannabis taxes and regulations, Shoenfeld said there are some
important caveats to the data.

One issue: State and local governments are continuing to license more
retail marijuana stores and sales will go up as a result. Another
qualifier: Cannabis sales go up significantly in March in other states
with legalized sales, perhaps because of warmer weather, Shoenfeld

"I'm not overly concerned at this point," he said.

The state has yet to report sales figures from the adult-use market
that started Jan. 1. The state Department of Tax and Fee
Administration expects to report on sales from the first quarter in
mid-May, said spokesman Paul Cambra.

Alex Traverso, spokesman for the state Bureau of Cannabis Control,
declined to comment on the BDS revenue estimates, saying the agency is
waiting for the official state report on revenues.

The low sales figures come as the cannabis industry has been
complaining about how high taxes and local-government bans are driving
consumers to the black and gray markets.

"Sales are happening but they're not happening in the regulated
market," said Kristi Knoblich, board president of the California
Cannabis Industry Association and co-founder of Kiva Confections, a
manufacturer of edible cannabis products.

Black and gray market sales are available to anyone with an internet
connection. Many unlicensed cannabis retailers advertise on Weedmaps,
an Irvine-based company that's been called the Yelp of weed.

In February, more than 6,000 dispensaries and delivery services in
California were listed on Weedmaps. By contrast, the state had
licensed 580 dispensary and delivery companies at that time.

The state Bureau of Cannabis Control has sent letters to about 1,000
unlicensed cannabis companies, ordering them to obtain licenses or
stop sales. It also has notified Weedmaps that it needs to stop
advertising unlicensed businesses, but Weedmaps has said the state
lacks the legal authority to force a nonlicensed technology company to

Taxes have been a concern for cannabis companies for a long time.
While some of the taxes were clearly spelled out in the law that
legalized recreational marijuana, local taxes are left up to the
communities, contributing to overall rates as high as 45 percent.

Cannabis retailers also are prevented from entering the market in many
cities and unincorporated areas because of local control, which gives
local government the authority to ban sales. Southern California News
Group and other Digital First Media newspapers recently found that
less than one-third of California cities allow retail sales. Likewise,
only 18 of 58 counties allow sales in unincorporated areas.
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MAP posted-by: Matt