Capitol Alert

California’s legal marijuana will outsell the black market in 5 years, forecast says

California’s black market for marijuana still rakes in more cash than the state’s legal cannabis industry, but a new analysis suggests the dynamic could flip within five years.

The forecast, from BDS Analytics and Arcview Market Research, estimates that California’s total cannabis market is expected to earn about $12.8 billion this year, with $8.7 billion going to illicit operators and $3.1 billion to the state-authorized market.

However, in 2024 legal marijuana sales are forecast to reach $7.2 billion, surpassing the projected $6.4 billion in illicit cannabis sales.

“A good number of California’s legal cannabis businesses are finding out they can compete, with their convenient, modern storefronts and delivery services, and branded edibles, concentrates, topicals and other products the illicit market largely doesn’t offer,” according to the report.

But the report warned that under California’s current tax and regulatory environment, that growth could be limited.

Whereas California’s illegal market will make up 47 percent of spending in 2024, the illicit markets in Colorado, Oregon and Washington are expected to make up less than 30 percent of spending by that same period, the report projected.

“Hence, nothing like the growth rates seen in earlier adult-use transitions can be expected unless California lightens the tax load and loosens constraints on legal operators,” the report said.

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