San Diego Officials Brace for Plunging Cannabis Revenue

City officials in San Diego expect tax revenues from cannabis sales to drop sharply this year as California’s regulated marijuana market continues to face difficult headwinds.

of San Diego Union Tribune reported on Tuesday “San Diego officials say they expect cannabis tax revenue to be 23% lower than previously expected during the current fiscal year ending June 30. $19.8 million vs. $25.7 million. Their “double-digit” drop in sales is due to illegal delivery services, which they estimate account for about half of the regional cannabis market. ”

“The legal industry faces enormous competition from the illegal industry,” said Phil Rath, executive director of the United Medical Marijuana Coalition, a trade group representing numerous marijuana dispensaries. says so. San Diego Union Tribune“Delivery services are an ongoing implementation challenge for the city.”

The plummeting revenues in San Diego are a symptom of problems throughout California, where the nearly seven-year-old legal cannabis market has collapsed.

in November, Reported by Politico Tax revenues from state licensed and regulated marijuana markets “fell below $130 million during the third quarter, down nearly $100 million from the same period last year.”

“Licensed retailers continue to lag behind a vast underground market estimated to be worth up to $8 billion, so sales of legal recreational and medical pots in California will increase by 2021. It peaked at over $1.5 billion in the second quarter of 2020 and has been shrinking steadily since.” Politico reported at the time“California residents purchased $1.27 billion worth of licensed cannabis products in July, August and September, resulting in $128 million in sales tax, according to California tax and The Office of Fees Administration said, “This is down $18 million from the previous quarter and down $52 million from a record high.”

in another story that monthPolitico reports that “California’s black market has undermined California’s legal industry,” and six years after the vote to legalize recreational pots in the state, “illegal sales are out of control.” “The market has far outstripped the market, and many businesses have closed their stores.”

“High taxes, local government opposition and underground market competition have hampered the success of the legal cannabis industry in the nation’s most populous states.” Politico Added.

Legislators and other officials across the state have pursued solutions to strengthen the legal weed market.

Earlier this month, Democratic lawmakers in California introduced a bill that would allow the state’s licensed cannabis consumption lounges to serve food and beverages.

“Small cannabis businesses in California are struggling,” said Rep. Matt Haney, who is supporting the bill. “Issues like oversaturation, high taxes and a thriving black market are hurting cannabis businesses that pay their taxes by the rules.”

In San Diego, city officials “also lowered their long-term forecast for cannabis tax revenue, which they say will pay for dispensary enforcement and a new cannabis equities program aimed at getting people of color on their feet in the industry.” It was expected.It’s been badly affected by the war on drugs.” according to union tribune.

“A little over a year ago, long-run estimates of cannabis tax revenues were projected at $31.5 million in fiscal 2025, $33.3 million in fiscal 2026, and $33.8 million in fiscal 2027,” the paper reported. “In November, he was revised to $26 million in fiscal 2025, $28.4 million in fiscal 2026, and $28.9 million in fiscal 2027. He said he was not confident.”