California Cannabis Tax Revenue Projections Fall Way Short

The LA Times reports that the legal marijuana tax revenue California is expecting is well below prior projections.

Looking at the state budget documents that were released this Thursday, we see the Newsom administration no longer believes it will collect anywhere near what they thought. Throughout June 2020, there is a $223-million cut from projections this administration made only four months prior.

So what does this mean for California?


The state treasury is not going to receive as much money as they initially thought, diminishing the state’s budget in the process.With a thriving black market that can only be decreased from enforcement, retail cannabis sellers are continuously being undercut. Since consumers can dodge taxes, it makes sense as to why the illicit market is doing so well. At this point, state regulators have failed to distribute the appropriate licensing. Thus, numerous communities are prohibiting commercial sales or lack the rules to allow a legal market to flourish.


While Governor Gavin Newsom claims it’s the legal industry will not reach its potential for five to seven years, he also states that local communities are to blame. He says they’re resisting the legal sales growth, and this is causing problems in the industry.

Newsom is quoted as saying, “It takes time to go from something old to something new.” We knew [some counties and cities] would be stubborn in providing access and providing retail locations and that would take even longer than some other states, and that’s exactly what’s happening.”

Even though Newsom claims to have a firm understanding of what’s going on, the fact that the California marijuana tax revenue expectations were so high before shows the problem is likely worse than his administration had anticipated. With this in mind, while the market continues to grow, it’s not happening as fast as the administration once thought.

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