California's Cannabis Market: 2022 Year In Review

California's Cannabis Market: 2022 Year In Review

<![CDATA[On Dec. 20, a 6.4-magnitude earthquake hit Humboldt County, Calif., part of the Emerald Triangle region that is arguably the heart of the U.S. cannabis industry, well-known for its legacy operators, ideal growing conditions and top-notch genetics.It felt like yet another blow to California, which has struggled considerably in 2022, a year where the persistent challenges of competition from the illicit market, high taxes, price compression, compliance standards and local cannabis business opt-outs have pushed the world’s largest cannabis market to the brink.“It’s just a recipe for disaster,” Jocelyn Sheltraw, who serves on the Board of Directors of the California Cannabis Industry Association, told Cannabis Business Times Senior Digital Editor Melissa Schiller in March. “It’s just created turmoil on the cultivation side.” In July, California implemented a policy change growers had long pushed for—eliminating the weight-based cannabis cultivation tax, a rate that had been $10.08 per dry-weight ounce for flower and $3 per dry-weight ounce for leaves, bringing much relief to licensed growers.Although removing the cultivation tax burden was perhaps the most impactful for cannabis growers, Gov. Gavin Newsom also signed 10 bills in September meant to offset other industry challenges, remove employer penalties for cannabis use and improve access for patients and consumers. However, it remains to be seen how much these and other efforts will mitigate stagnant sales in the state, and when these changes will start to impact markets. As Associate Editor Tony Lange reported in November, “California’s adult-use retail market is on track to shrink for the first time since the state launched commercial sales in 2018.“State-licensed dispensaries reported $1.27 billion in taxable adult-use sales for the third quarter 2022—a nine-quarter low going back to the second quarter of 2020—according to data released Nov. 18 from the California Department of Tax and Fee Administration (CDTFA),” Lange reported.Throughout…

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