California cannabis retail stuck in the weeds

First-year sales far below original projections

Los Angeles /
Dec.December 27, 2018 02:00 PM
(Credit: iStock)

It turns out not all Californians are high on the idea of cannabis shops opening in their neighborhood.

After voters approved Proposition 64, proponents projected thousands of storefronts and farms would be licensed, and that cannabis would eventually rival California’s $7-billion wine industry. But the Los Angeles Times reported that first year sales show the market hasn’t performed as well as retailers had hoped. Prop 64 legalized recreational use of pot for adults, and established sales and cultivation taxes.

Officials estimated there would be 6,000 licensed shops in the first few years. But the state has issued licenses for just 547 so far, and officials expect only $471 million in tax revenue – far less than the $630 million projected by Governor Jerry Brown. The state also issued 2,160 cultivation licenses after hoping to see at least 5,000 commercial growers licensed this year.

Only a few cities like West Hollywood are approving dozens of licenses. Business owners say they’ve been bogged down by regulations, high taxes, mounting court challenges, and cities choosing to ban cannabis shops. Of L.A. County’s 88 cities, 82 prohibit retail sale of marijuana, along with more than 80 percent of all cities throughout California.

Legislators hope to ease the tax burden this year. They expect many municipal leaders are waiting to see how the market plays out in places like Los Angeles, which has been a boon for landlords.

And more is on the way. For example, Santa Monica-based development firm Bow West Capital will open its Green Street Building, which will be occupied exclusively by businesses in the cannabis industry – the largest such building in the country. [LAT] — Gregory Cornfield


Related Articles

arrow_forward_ios
AEG CEO Dan Beckerman and the Ritz-Carlton and JW Marriott hotels at the complex at 800 West Olympic Boulevard (Getty, Google Maps)
AEG looks to sell stake in LA Live hotels
AEG looks to sell stake in LA Live hotels
Randy Kendrick, chief executive officer, Xebec Realty, and 12975 Bradley Avenue in Sylmar, CA (Xebec Realty, LoopNet)
Xebec looks to flip Sylmar industrial to self
Xebec looks to flip Sylmar industrial to self
The CitizenM hotel in Los Angeles (Booking)
California starts to refill hotel development pipeline
California starts to refill hotel development pipeline
Distress specialist buys Santa Barbara hotel
Distress specialist buys Santa Barbara hotel
Distress specialist buys Santa Barbara hotel
Richard Lovett, co-chairman / agent, motion picture library literary, CAA (CAA)
CAA picks JMB Realty’s new Century City tower for HQ
CAA picks JMB Realty’s new Century City tower for HQ
Kevin Staley, managing partner, Staley Point Capital; Andrew Terris, managing director, real estate, Bain Capital; and view of 12065 Pike Street (Google Maps, Bain Capital, Staley Point)
Staley Point, Bain spring for beer bash
Staley Point, Bain spring for beer bash
Rexford Industrial Realty co-CEOs Michael Frankel and Howard Schwimmer and property at 4240 West 190th Street (Wexford Industrial Realty, Newmark)
Rexford’s latest in South Bay brings 307K sf
Rexford’s latest in South Bay brings 307K sf
Microsoft CEO Satya Nadella, Activision Blizzard CEO Bobby Kotick and 2701 Olympic Boulevard (Wikipedia, Loopnet)
Here’s how Microsoft will expand its SoCal office footprint with Activision
Here’s how Microsoft will expand its SoCal office footprint with Activision
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...