The Dirty Little Secret of the
The cannabis industry in California is that no one makes as much money as they thought they would.
A recent cannabis report from Office of the Controller shows that after peaking in the second quarter of 2018, local sales fell – eventually falling back to pre-recreational use levels – for the next three fiscal quarters.
Exclusive data obtained by SF Evergreen shows that sales, after falling for three quarters, reached a new high in the second quarter of 2019… before falling again.
“Since the report was published, we now have taxable sales data for the cannabis industry in San Francisco through September 2019,” said Controller’s Office senior performance analyst Jeff Pomrenke.
During the second quarter of 2019, from April through June last year, Pomrenke says SF pot purchases “stopped the downward trend and ended with the highest amount of taxable cannabis sales at $61,998,965.” That spike set a new monthly record of $20.6 million, likely helped by last year’s 4/20 bacchanalia that fell on a Saturday.
But over the next three months, sales plummeted again. Net pot purchases fell to $56 million from July to September 2019, down 9.1 percent.
That means $226 million worth of cannabis was sold in the past 12 months, which we have hard numbers on. We will only have the figures for the end of 2019 in a few months. “There is usually a four to five month delay in collecting this data,” Pomrenke tells us. “Q4 for 2019 will not be available until around April 2020.”
All that information comes from City Hall. We checked with several pharmacies that have been around since the early days of medical marijuana to see if these numbers match their receipts.
“We haven’t seen any significant changes in our sales in recent years,” said Kevin Reed, owner of Green Cross, which has been around since 2004. interesting to see that our averages do not change.”
“We know this is not in line with the report’s findings,” he added. “It’s possible that newer cannabis dispensaries with less established customers will see a different number.”
At SPARC, which has had its SoMa location since 2010 and opened one in Lower Haight in 2016, owner Erich Pearson says, “It’s not the growth we expected, but we’ve had pretty steady growth after legalization.”
Still, Pearson notes that “there are a lot of illegal delivery companies” and “it’s very possible that the on-demand delivery that some of these companies do is sucking sales out of town.”
Sales growth has often stalled since legalization, but cannabis prices in San Francisco have continued to climb. We now have the most expensive marijuana of all major cities in a legal state at $20 per gram average, compared to $17 in Chicago and $15 in Las vegas.
“Prices have risen unbelievably high since legalization,” said Sara Payan, a member of the San Francisco Cannabis Oversight Committee advising the Board of Supervisors. “The green rush is over. Cannabis is not the cash cow that people outside the industry think it is. Including all these taxes hinders access and lowers sales.”
The Cannabis Office of Cannabis in San Francisco has approved three new dispensaries in recent months, with a staggering 133 other applicants in the pipeline. “We’re dealing with a huge problem,” said SPARC’s Pearson. “To combine [declining sales] with 100 permits on the way and we need a drastic re-approach.”
Even the “4/20 bump,” which fueled the only positive growth quarter of the past year and a half for pharmacies and delivery services, may not be as potent in 2020. Thanks to the leap year, 4/20 will fall on a Monday, which can put a damper. its for the schwaggy shenanigans in Golden Gate Park.
The lagging sales of marijuana isn’t just a problem in San Francisco. In recent months, there have been major layoffs at the largest Big Weed companies such as Eaze, Weedmaps and dispensary megachain MedMen. Anyone who had hoped to become an overnight millionaire in the California marijuana boom will have to accept some crass new realities.