California’s cannabis market could take a hit because of the coronavirus

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California’s governor believes the legal cannabis market in the state is going to see a revenue loss

The coronavirus pandemic has impacted the cannabis industry in a very particular way. For a moment, it looked like it has been nothing but benefits due to the increased sales related to a long period of stay at home orders, but, now that restrictions are beginning to be lifted, during the next fiscal year, California is expecting to see a significant decline in sales. As a result, a drop in its tax revenue coming from those sales is expected, according to Governor Gavin Newsom, who adjusted for this projection in the state’s budget proposal ahead of the new fiscal year.

Newsom was expecting the cannabis industry to generate $479 million in excise revenue; however, the updated data shows an estimate of $433 million. Next year looks even worse for the state’s cannabis industry, as it was estimated that sales will fall another 1.8% to $435 million. This is contrasting to the projections coming from the governor’s office at the start of the year, which expected a 23% market growth for total revenue of $590 million.

For Newsom, legal cannabis sales will decline because of the post-coronavirus recession, which he estimated to have a major impact on the younger base of cannabis consumers. He adds to that the fact that the difficulty to access banking services and the still strong illicit market that continue to affect its growth.

If the governor’s estimation is correct, one company that could feel the impact is Curaleaf Holdings. The company just purchased the Select brand, which has over 900 retailers selling its products. The brand has a strong presence in California.

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