Month: October 2021

California state officials revealed data showing that recreational cannabis tax revenues for the most recent fiscal year set a new all-time record. During the fiscal year, which ran from July 2020 through June 2021, sales from adult-use marijuana at dispensaries located throughout the state generated more than $800 million in tax revenues. The incredible success of the California recreational marijuana market bodes well for the future of the cannabis industry not just on the West Coast, but across the United States.

To learn more about California’s promising cannabis economy, keep reading this blog.

California Cannabis Market Generating Record Revenues

The California Legislative Analyst’s Office (LAO), which is tasked with providing fiscal advice to the California Legislature, recently released a report showing that adult-use marijuana tax revenues for the 2020-2021 fiscal year totaled approximately $817 million. This represented a whopping 55% year-over-year increase when compared to the previous fiscal year. Moreover, the combined excise and cultivation tax revenue collected from cannabis operators during the fiscal year’s 4^th quarter, which ended in June, exceeded $210 million. This was the single-largest quarter in the history of California’s legal cannabis market. Beyond that, these numbers, which are merely estimates, could rise when the official sales figures are tallied by the California Department of Tax and Fee Administration.

The booming cannabis market in California is representative of the strong sales in other states where cannabis has been legalized for recreational use. Remarkably, the retail cannabis market in California and other states has thrived despite the adverse effects of the COVID-19 pandemic on just about every other aspect of the economy. While many retail businesses were forced to shutter their doors and lay off workers due to struggling sales numbers, the cannabis industry saw a rise in sales revenues as more and more consumers looked for ways to relax during the pandemic.

How Does California Collect Taxes from Retail Marijuana Sales?

The California LAO report accounts for two types of taxes on adult-use marijuana:

1. A cultivation tax on cannabis that is grown and cultivated to be sold on the retail market later.
2. An excise tax on retail cannabis sold at state-licensed dispensaries.

One type of cannabis tax that is missing from this data is sales taxes that are collected at the point of sale. Additionally, depending on the municipality, certain California cities and towns also collect additional taxes from retail dispensaries.

Importantly, several California municipalities are expected to issue marijuana business licenses over the next few years. For example, Red Bluff, Chico, Redwood City, Fresno, and Costa Mesa have pending retail licenses in late 2021 and early 2022. Additionally, West Sacramento, San Jose, Visalia, San Bernardino, and Long Beach are likely to issue retail marijuana licenses in 2023.

Contact Scythian Real Estate for Information on Cannabis Operator Financing

Scythian Real Estate is a privately held cannabis real estate fund with properties throughout the United States. If you are a cannabis operator looking to expand your operations into California or anywhere else where cannabis is legal, Scythian can help. Send us an email today.

PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.

The legal cannabis market is booming throughout the United States, and it appears that the industry is going to continue to thrive in the years ahead. A recent economic study found that annual retail sales of marijuana will eclipse $43 billion by 2025. These financial projections, along with optimism about federal legalization efforts, have cannabis companies and their investors excited about what the future holds for the industry in general.

To learn more, keep reading this blog.

Study: Retail Cannabis Market Will Remain Strong

New Frontier Data, a company that specializes in cannabis market research, has released an economic analysis that projects retail sales of both adult-use marijuana and medical marijuana to reach an astonishing figure in just a few years. According to the study, the legal cannabis market in the U.S. will get even stronger as more and more states look to pass their own legalization laws. By 2025, the study indicates, annual sales of cannabis at retail dispensaries in the United States will be around $43 billion. To put that number in perspective, total combined sales of adult-use marijuana and medical use marijuana were roughly $20 billion in 2020.

In the current climate, roughly two-thirds of all retail marijuana transactions involve recreational marijuana and related products, and the New Frontier Data research shows that the majority of retail cannabis sales will continue to involve adult-use marijuana. Still, sales of medical cannabis sales should remain strong, particularly as more and more people look for alternative ways to relieve pain and cope with debilitating medical conditions and diseases.

State Cannabis Markets Are Thriving

The legal marijuana market has hit historic levels in 2021, with each new month seeing retail cannabis sales in states across the country set a new all-time record. For example, Colorado recently recorded a new quarterly high for adult-use cannabis sales.

In addition to sales surging in states with established cannabis markets, several more states are likely to generate millions of dollars in cannabis revenues in the coming months when their own markets are established. As many as 10 new state markets are expected to be activated over the next two years. This includes burgeoning cannabis markets in both New York and New Jersey, where state lawmakers have finally begun implementing the framework for legal sales of recreational marijuana by licensed cannabis operators. These markets could be vital to the success of the cannabis industry generally, especially since market research forecasts that more than 40% of cannabis demand in the U.S. will be met by legal transactions in regulated cannabis markets by 2025.

Is Federal Legalization of Cannabis on the Horizon?

All indications are that federal legalization of cannabis for recreational use is on the horizon. Lawmakers in the United States Congress have been working hard to get bipartisan approval in both the House and the Senate for national legalization, and the expectation among cannabis industry insiders is that it is probably only a matter of time before certain obstacles and regulatory issues are overcome. The recent enthusiasm for legal cannabis at the federal level has coincided with the strong growth of cannabis markets in states where either recreational marijuana or medical marijuana is already legal, suggesting that some legislators may see an opportunity for additional tax revenues at a time when government spending has become a major talking point for the upcoming 2022 election. The fact that state and local cannabis markets thrived during the COVID-19 pandemic may also be a factor in the support for national cannabis reform measures.

Contact Scythian Cannabis Real Estate

Scythian Real Estate is a privately held cannabis fund that assists cannabis operators who are interested in securing financing. Email us today for additional information.

PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.