The California marijuana business landscape remains one of the toughest in the nation, and over the past three years one of the areas in which industry advocates had placed much of their hopes – repealing city-level bans on cannabis commerce – has made barely any gains, despite a flurry of victorious pro-marijuana ballot measures and ordinances.
At least 50 California cities moved to allow marijuana retail shops since 2020, according to a tally by Hirsh Jain at Ananda Strategy, but the vast majority haven’t yet opened for business because of local and state red tape.
Jain calculated that in just 15 specific localities – including Fresno, Costa Mesa, and Santa Barbara County – there should be 129 legal dispensaries operating by now, but only 18 have opened for business.
Some examples, according to Jain:
- Fresno, two of 21 stores open
- Corona, three of 12 stores open
- Stanton, one of four stores open
- Costa Mesa, five of 20 stores open
- Redwood City, two of six stores open
- Oxnard, one of 16 stores open
- Tracy, one of 11 stores open
- Daly City, one of six stores open
- Santa Barbara County, two of six stores open
- Ventura, zero of three stores open
- National City, zero of six stores open
- Encinitas, zero of four stores open
- Vacaville, zero of six stores open
- Santee, zero of four stores open
- Woodland, zero of four stores open
“In those 50 cities that did move, the bureaucratic process at the state and local level has made it impossible for these stores to open,” Jain said. “If these stores were open, as they should have been by now, then the California market would not be feeling the pain it is today.”
That would easily increase the roughly 1,100 legal retailers across California by more than 10%, Jain estimated.
“Fresno was expected to be at least a $300 million market. Right now, it’s a small fraction of that, because there’s only two stores open. If you compound that 50 times, it’s easy to do the math,” Jain said of the economic toll taken by the delays.
“Even if no other cities opened up, if we just got these stores open, which we anticipated when we passed these ordinances back in 2019 and 2020, then this would be an $8 billion market,” he said, instead of the $5 billion the legal California cannabis trade is estimated to be worth.
By contrast, more than 40% of the legal retailers are located in just seven cities, Jain said: Long Beach, Los Angeles, Palm Springs, Sacramento, San Francisco, Santa Ana and Santa Rosa. Which means competition in those seven cities has gotten intense and has driven at least some legal retailers out of business.
“It’s a bloodbath if you’re in those markets,” Jain said, adding he keeps hearing of more retailers closing, either permanently or temporarily, in cities such as L.A., Palm Springs and Santa Rosa.