California Cannabis Sales Underperforming in 2020 During COVID-19
Due to the coronavirus pandemic, California cannabis sales are having a slow start. The pandemic-induced recession is hitting many industries despite an initial spike in demand for dispensaries. The state projected the cannabis excise tax would bring in 479 million in 2020 and $590 million in the fiscal year starting July 1. The new budget forecasts a decline to $435 million next year.
No Cannabis Banking Services
Cannabis businesses have less access to banking services, and therefore do not have options as far as liquidity. Still competing with the illicit market, legal cannabis companies have sought for new terms to help during this downturn. The Newsom administration relaxed restrictions on how marijuana dispensaries can operate, deferred license renewal fees and extended the deadline for quarterly filings.
Industry insiders are bracing for a continued downturn until the disease has been stemmed. These dire situations will surely give the illicit market the heads up for the remainder of the year. While the number of individual purchases has risen, the volume of cannabis products purchased is steadily going down. California cannabis sales will hopefully rebound in the second half of the year but with economy attempting to bounce back.
No Financial Assistance
The state tax agency has offered payment plans for cannabis businesses that are struggling to pay sales and use taxes. Certain rules are also being waived for businesses stuck in limbo. The California cannabis organizations will continue to lobby Congress to access some larger pools of federal assistance being offered to small businesses during the pandemic.
As of yet the majority of states bar cannabis businesses from traditional banking institutions. Until cannabis is removed from the federal schedule I controlled substance act, the same holds out for the future.
Josh Drayton, a spokesman for the California Cannabis Industry Association, stated “We initially saw a spike in sales that was attributed to panic buying, which have since leveled out.