By Benjie Cooper
IG: @nuglifenews
YouTube: Lucid’s Vlog
On the heels of news that California has become the 5th largest economy in the world, governor Jerry Brown released a revised state budget on Friday which showed a healthy economic recovery to the tune of $8.8 billion.
But while the state is doing well financially, tax revenue from adult-use marijuana sales is falling below estimated numbers.
In the January budget proposal, the current administration estimated that the state would amass $175 million in excise taxes in the first year. But the amount collected in the first quarter has only amounted to around $34 million, well below the early projections.
“Based on this quarterly tally, we think that 2017-18 revenue likely will be somewhat lower than the administration’s January estimate,” a staff member wrote in a post on the Legislative Analyst’s Office website.
But in the governor’s budget, the fact that the market is new is taken into consideration, and that it will take time to get the system running properly.
“While the forecast assumes revenues will be phased in over time, preliminary data indicates revenue receipts are slower than anticipated,” the budget states. “Cannabis revenue projections are subject to great uncertainty.”
Even though the industry is off to a slow start, the current budget outlook shows a strengthened cannabis market bringing in $185 million for 2017-18.
“I would suspect they are anticipating a ramp up in entities being licensed,” BDS Analytics VP of operations Greg Shoenfeld told CNBC in an interview. “And that the increased access in the market will significantly accelerate growth and revenues.”
A slow start to California’s new legal cannabis market is not anything out of the ordinary. Colorado, Washington, and Oregon all experienced issues during the early stages of legalization but managed to work through the transitional period and get their systems fully functional.
