Michigan Beats California In Legal Cannabis Sales: Why Is Golden State's Weed Industry Losing Its Shine?

Zinger Key Points
  • Michigan's flourishing cannabis market, which sold 22 million products in March, surpassed California for the first time.
  • California's cannabis market faces challenges from high taxes, regulations and a thriving illicit market, causing declining legal sales.
  • Michigan's low tax rates and strong enforcement boost legal cannabis sales, generating over $457 million in tax revenue in 2023.

Despite California’s reputation and larger population, new data from cannabis analytics firm BDSA reveals Michigan has emerged as the top seller of legal cannabis in the U.S., surpassing the Golden State in unit sales. In March, Michigan sold 22 million cannabis products, while California sold 21.3 million, marking the first time another state has outsold California in legal cannabis products.

The BDSA data, shared with SFGATE, uses point-of-sale information and highlights a significant shift in the US cannabis market. While California continues to lead in revenue, with $1 billion in sales for the first quarter 2024 compared to Michigan’s $786 million, the volume of products sold is higher in Michigan. This performance is attributable to lower cannabis prices in Michigan, making it more accessible to consumers.

High Taxes And Questionable Regulations Hurt California Cannabis Sales

California’s legal cannabis market faces numerous challenges, including high taxes and stringent regulations that drive up costs. These issues, combined with weak enforcement against illegal sales, have allowed the illicit market to thrive. As a result, California has seen declining legal sales, with first-quarter figures revealing the lowest sales since 2020. The state’s cannabis industry, which once boasted robust growth, is now described as “on the verge of collapse” by industry experts like Hirsh Jain, a Los Angeles-based consultant.

Michigan’s lower tax rates and stronger enforcement against illegal operations have pushed consumers into the legal market. Additionally, Michigan’s neighboring states do not have legal recreational cannabis, attracting out-of-state customers.

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Michigan Cannabis Market Booms, California Struggles

Michigan’s legal cannabis market is flourishing, with $3.06 billion in sales in 2023, a 25% increase from the previous year. This boom has generated significant tax revenue, with over $457 million collected in 2023 alone. The state has also seen rapid expansion in dispensaries, now totaling around 750 statewide.

In contrast, the situation in California is dire. Illegal cannabis operations are rampant, particularly on public lands, causing environmental damage and posing dangers to public safety. The California Department of Fish and Wildlife reports that nearly a quarter of the U.S. black market cannabis is grown on public lands in the state. These illegal operations undermine the legal market and cause severe ecological harm.

Despite efforts by Governor Gavin Newsom’s Unified Enforcement Task Force to crack down on illegal operations, the problem persists. In the first quarter of 2024, the task force seized over $61 million in illegal cannabis products. Additionally, crossed allegations between key state operators like Glass House Brands GLASF GHBWF and Catalyst Cannabis over illegal market involvement further complicates California's industry landscape.

Now read: California’s Cartel Cannabis Flourishes In National Parks: Weed Grown On Public Lands Accounts For One-Quarter Of US Black Market

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Posted In: CannabisNewsRegulationsBDSACalifornia cannabisCalifornia Department of Fish and Wildlifecannabis salesCatalyst CannabisGavin NewsomMichigan cannabis
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