Cannabis sales in Washington state have fallen by about $120 million over the past year, according to a recent market analysis report. Marijuana retail sales fell more than 8% from July 2021 to June 2022, according to a report on cannabis markets in Washington, California, Colorado and Oregon from cannabis data analytics firm Headset.
Declines in cannabis retail sales in Washington state follow a strong two-year period driven by higher sales largely related to the COVID-19 pandemic and the closure of many businesses deemed nonessential. continued to grow. Like many other states that have legalized cannabis, Washington regulators have designated marijuana retailers as essential businesses, allowing them to continue doing business during the lockdown.
“From March 2020 to March 2021, the traditional cannabis market experienced dramatic growth,” Headset wrote. “For example, in the first few months of the pandemic, Colorado’s total adult sales increased 63% from February 2020 to July 2020.”
Over the same period, Colorado’s average monthly sales increased 25.8% year-over-year, while Oregon’s monthly sales increased 36.6%. Brian Smith, spokesperson for the Washington State Liquor and Cannabis Commission, said last year’s decline in sales was a result of the economic situation post-pandemic.
“What you see as the ‘dip’ is actually a return to normal growth in sales as more people return to in-person work,” Smith said. said in a statement quoted by Seattle Times.
Data showed a decline in the frequency of visits consumers made to cannabis retailers and the amount of money they spent each time. Transaction value has fallen by almost $3, from $34.14 in July last year to $31.41 in 2022.
Aaron Smith, co-founder and chief executive of the National Cannabis Industry Association, said other states that have legalized the sale of recreational marijuana have also recorded declines in retail cannabis sales. .of headset report Oregon saw a nearly 10% drop in regulated marijuana sales, while Colorado saw a drop of more than 11%.
“This is not limited to the cannabis industry in Washington state.” Smith said center square on mail. “We’re seeing similar trends across the country.”
High Taxes Hindering Legal Cannabis Industry
Like many cannabis industry observers, Smith believes marijuana retail sales are declining because taxes on regulated weed may be excessive compared to other industries. , making cannabis available on the illicit market more attractive to consumers, whose prices for consumer goods have already risen due to international supply chains. Task.
“I believe the main driver is inflationary pressure, with more consumers sourcing cannabis from underground, unregulated markets,” Smith said. “The heavy tax and regulatory burden on our industry makes it very difficult to compete with underground cannabis providers who pay no taxes at all and are not required to follow state rules and regulations regarding the production and sale of cannabis. ”
Brian Fitzpatrick, chairman and CEO of Qredible, a cloud-based compliance platform for the cannabis industry, said Washington state has the highest taxes on cannabis in the industry, with state sales and sales taxes above 20% combined. said it would be taxed at 46% more. Combined.
“We are concerned that the constant pressure from large taxes will force companies to cut costs and compete in illicit markets in the areas of quality and compliance,” Fitzpatrick said in an email. Stated. high times“The dangers of the illicit market are clear. Safety and regulatory standards are lacking. Governments should reconsider excise tax relief if they want to promote safe and law-compliant use.” ”
The Washington Canna Business Association agrees that high taxes may be hindering the growth of the legal cannabis industry.
“This high rate may encourage some consumers to buy cannabis products from illegal markets that are neither regulated nor taxed,” the trade group said in a statement.