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California’s cannabis industry appears to be taking a full-on nose dive, based on license statistics from the state this month.
To back up reports of falling sales, lower-than-expected state cannabis tax revenues and ever-increasing unpaid industry tax bills, the state’s Department of Cannabis Control license database now shows that there are just 8,503 “active” business permits as of Feb. 18, compared to 10,853 licenses that have been canceled, expired, surrendered or are otherwise not in use.
It’s the first time since the newly regulated recreational market launched in 2018 that inactive licenses have outnumbered those that are still operational, SFGate reported.
That was enough for Jonatan Cvetko, the executive director of the United Cannabis Business Association, to label the state’s regulatory framework a “complete failure,” according to SFGate.
“We’ve finally hit a threshold where we’ve seen the number of participants who have come into the industry who have failed outweighs the number of people succeeding, and succeeding is probably too strong of a word,” Cvetko told the newspaper.
Cvetko said the number of operators when the industry was still only loosely governed by Proposition 215 in the gray market days of medical cannabis prior to 2018 dwarfed the current number. Industry estimates from that era suggested there were as many as 100,000 operational cannabis companies, but precise figures were difficult to pin down, since there was no statewide database as there is today.
“California destroyed the industry that we had,” Cvetko said.
DCC spokesman David Hafner pushed back on Cvetko’s analysis, however, and noted that the number of inactive licenses is far larger than the number of companies that have gone out of business, simply because many companies held multiple permits. Some growers even held dozens of permits in the early years of the recreational market, but many of those have been surrendered back to the state.
“The number of inactive cannabis licenses is not indicative to the health of the licensed cannabis market, let alone a statement on the established framework for the regulation of it,” Hafner told SFGate.
Hafner pointed out that 1,071 cannabis cultivation licenses became obsolete after a structural change that allowed the department to begin awarding “large” grow permits.
Of the now-unused permits, the vast majority – roughly 7,100 – are related to cultivation, SFGate reported. There are also “over 1,100 inactive distribution licenses, nearly 500 inactive delivery licenses and over 300 inactive retail licenses,” the outlet reported.
Out of the still-active permits that comprise California’s legal marijuana market, there are:
1,225 storefront dispensaries
330 delivery operations
4,741 cultivation licenses
638 manufacturers
371 microbusinesses
992 distributors
28 testing labs
39 event organizers
“}]] [[{“value”:”For the first time since the state legalized cannabis, canceled, expired, surrendered or are otherwise not in use licenses outnumber active licenses.
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