As we approach the end of 2018, California marijuana retailers have seen a significant spike in sales in the third quarter of the year. The projections for first half of 2018 were expected to be bit higher as tax revenue early on was underperforming. Cannabis sales in Q1 generated $34 million with Q2 pulling in slightly more at $42 million.
Fortunately, California marijuana retailers brought in third quarter tax revenue at around $52 million signalling to many in the industry that the market is beginning to thrive. There have been a fair amount of hurdles and road bumps during the transition to recreational sales but a stabilized market could be in sight.
One of the main factors in the boost in cannabis sales is that there are simply more licensed California marijuana retailers. The Bureau of Cannabis Control increased the number of marijuana retail licenses by 10% in Q3 giving way to more than $350 million in sales. As more and more dispensaries obtain their annual cannabis business licenses and the supply chain becomes more established, sales should continue to increase.
Many industry professional have speculated that local bans on marijuana dispensaries in addition to black market sales have contributed to the underwhelming tax revenue in the first part of the year. Once regulators finish drafting permanent cannabis regulations and make them official, there will market will likely settle in and begin to grow exponentially.
California’s medical marijuana market has been well established earning over $3 billion in sales last year alone. It is currently twice the size of both Colorado’s medical and recreational marketplace but could soon take the back seat to California’s adult-use market.
The State of California is certainly not the only one benefiting from increased sales. Public companies like KushCo Holdings and MedMen Enterprises have seen exceptional gains in the latter part of 2018. The potential for California marijuana retailers is evident and once the supply chain hits its stride there will be no looking back barring any federal interference.
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