california Archives - Page 2 of 4 - Green Market Report

Video StaffVideo StaffDecember 13, 2018

1min7980

Humboldt County in California has seen its fair share of boom and bust cycles. From gold mining to logging, this county continues to reinvent itself. Now it’s cannabis that is fueling the county and specifically the town of Eureka’s latest boom. Rob Holmlund, the Director of Community Development in Eureka California tells the Green Market Report how the area has been transformed by the cannabis industry that has brought meaningful jobs to the residents.


William SumnerWilliam SumnerDecember 12, 2018
Alaska.jpg

4min19530

Earlier this week, the cannabis technology platform LeafLink released its 2018 Wholesale Cannabis Pricing Guide and the company learned that Alaska and Maryland are the two most expensive states to buy legal cannabis, followed by Nevada and California.

Examining the wholesale landscape of some of the most mature cannabis markets in the United States, the guide looks at the average wholesale price of cannabis in eight states: Alaska, Arizona, California, Colorado, Maryland, Nevada, Oregon, and Washington. The product types covered by the report include concentrates, cartridges, edibles, flower, and pre-rolls.

Although the report does not dive into the specifics of why one state is more expensive than another, the authors speculate that the Alaska and Maryland’s high prices are due to the states having a low number of cannabis cultivators. In the two states where cannabis is cheapest, Washington and Oregon, there is currently a glut of cannabis cultivators; leading to low prices and oversupply.

“As the standard wholesale marketplace for the industry’s leading brands, we are able to provide crucial market information to cannabis retailers and brands, which will help inform their plans for 2019,” said LeafLink Co-Founder and CEO Ryan G. Smith in a statement. “As more states like Massachusetts, Connecticut, Pennsylvania, and Michigan continue to establish wholesale operations, we will be able to provide a larger scope of market activity to further empower the LeafLink community, as well as the industry at large.”

Nationwide, the average price for a pound of cannabis flower is $2,124 per pound, while a gram of pre-rolls costs around $5.66 per gram. The average price for cannabis concentrates costs approximately $26.07 per gram and cartridges are priced at around $39.55 per gram. Edible cannabis products, on average, cost around $0.20 per milligram.

When taken on a state-by-state level, cannabis prices start to vary. With regards to cannabis consumer preferences, the report found that consumers prefer products in the lowest 25% price range. The exception to this was pre-rolls. On average, consumers preferred pre-roll products in the 25%-49.99% price range.

The report also examined the relationship between pricing and discounted sales. On average, approximately 16% of the products sold through LeafLink’s platform have a discounted price. Across all eight states examined, discounted products generated 3% more sales than regularly priced products.

The discount effect is magnified when combined with larger sales campaigns. During the last year, LeafLink ran two sales promotions, one in the month leading up to 4/20 (dubbed 3/20) and one in July called 7/10; which is a considered an industry-wide “holiday” for concentrates.

When combined with those larger sales campaigns, discounted products generated 37% more sales on 3/20 and 38% more sales on 7/10. This seems to suggest that cannabis retailers stand to significantly boost their sales numbers by combining sales promotions with discounted cannabis products.


Debra BorchardtDebra BorchardtAugust 20, 2018
shutterstock_784662001-1280x720.jpg

4min19030

The state of California released its tax data for Q2 cannabis sales last week.  Tax revenue from the cannabis industry totaled $74,240,257.00 million from April 1, 2018, through June 30, 2018, which includes state cultivation, excise, and sales taxes. It does not include tax revenue collected by each jurisdiction.

According to GreenWave Advisors, that means that the implied recreational retail revenues increased 36% to ~$290M from $213M in Q1.  In addition to the retail revenues, the implied wholesale revenues would have reached roughly $29.9M vs $10.7M quarter-over-quarter.  “We note while these results fall below expectations, it does not include medical marijuana sales in which sales and excise taxes are excluded,” said Matt Karnes, the founder of GreenWave Advisors.

The California Department of Tax and Fee Administration also noted the excise tax on cannabis generated $43,490,668.00 million in revenue during the second quarter of the calendar year 2018. The cultivation tax generated $4,482,119.00 million, and the sales tax generated $26,267,470.00 million in revenue.

California cannabis retailer MedMen (MMNFF) said on Monday that its stores accounted for roughly six percent of all legal retail sales of cannabis and cannabis products in the second quarter for the state. MedMen said in a statement that its eight stores represent about two percent of all retailers, meaning on average MedMen stores outperform non-MedMen stores by a factor of three.

“The strong growth in tax revenue in the second quarter of the year shows that the legal cannabis industry is delivering on its promise of economic activity and greater public resources to the people of California,” said Adam Bierman, MedMen chief executive officer, and co-founder.

While MedMen is clearly happy with its results, the actual tax receipts are far lower than what the state had projected in the budget proposals. Governor Jerry Brown had estimated that the state would pull in $175 million in the first six months and instead the number was $135.1 million.

GreenWave went on to add that approximately 100,000 medical marijuana cards have been issued by the state since 2004 so Karnes believes that total retail sales are likely considerably much higher with med marijuana included and he estimates that its near $700M  for the first half of the year.

“As the regulated market in CA continues to evolve, it will likely experience ongoing sales pressure in the near term.  However, we remain optimistic that these “growing pains” will ultimately be resolved to achieve a $7B retail market over the next 5 years,” said Karnes. He went on to add that the average revenue per dispensary for the first half of the year is roughly $300,000 per month.

At the end of June, there were approximately 64 medical only licenses representing 15% of the market and 331 licenses for outlets selling both medical and recreational. At that time there were only 21 recreational only licenses representing 5% of the market.


Jack SmithJack SmithAugust 8, 2018
shutterstock_784662001-1280x720.jpg

4min22280

Despite the overwhelming majority of Californians being happy with the legal cannabis market, there is still a significant percentage of residents who buy marijuana illegally, due in large part to high taxes on the substance.

A new report from Eaze Insights shows that 84 percent of Californians are “satisfied” with the legal marijuana market, but approximately 20 percent have purchased illegal or illicit marijuana in the past three months. Concerning to regulators and the state’s finances is that 84 percent of that segment of the population is “highly likely to repeat that behavior in the future due to the illicit market having cheaper products and no tax.”

Part of the concern is that although consumers would like to purchase marijuana legally if, given the option, the taxes are a major concern for many consumers. According to the California Department of Tax and Fee Administration, marijuana has a 15 percent excise tax, though recent reports have suggested the state is looking at cutting taxes as a way of driving legal means of consumption.

Approximately 85 percent of Californians have purchased cannabis from “unlicensed sources,” but most of them cited factors such as lower prices and a lack of taxes for the reasons those purchases were made.

Other consumers say they have purchased from illegal marijuana vendors because it’s “hard and time-consuming” to find legal businesses. Approximately 1 in 7 respondents said it was “not easy to identify licensed cannabis businesses.”

Although the picture has been painted with some negative brushes, there are changes that can be made that will positively affect California’s burgeoning weed economy.

If taxes were decreased by 5 percent, that could drive much of the illegal market into the legal market, Eaze notes. The town of Berkley took that initiative early on when it lowered its city tax on cannabis from 10% to 5%.

“A 5% decrease in the overall tax rate in CA could bring twice as many CA consumers to only purchase cannabis from licensed businesses (from 16% to 32%),” Eaze wrote in an email obtained by Green Market Report. “Conversely, a 5% increase in the overall tax rate in CA would drive twice as many CA consumers to only purchase from unlicensed businesses (12% to 23%).”

Use cases in the state include wellness (treating or coping with illnesses such as cancer) and consumers are increasingly becoming more sophisticated in the types of cannabis they consume.

“They care the most about consistent product quality,  fair pricing, packaging, safe access and a great customer experience, the same way they care about those things for more traditional consumer products,” the email obtained by GMR said.


William SumnerWilliam SumnerApril 24, 2018
shutterstock_256424509-1280x853.jpg

3min19220

The world of mergers and acquisitions is heating up in the state of California as two cannabis companies today announced a pair of high priced acquisitions.

First, Golden Leaf Holdings (GLH) announced that is has signed a letter of intent (LOI) to acquire a cannabis dispensary in northern California. Included in this transaction are all of the dispensary’s assets; such as licenses and permits for cannabis cultivation, production, manufacturing, distribution, and retail. Under the agreement, Golden Leaf will pay $1.25 USD million upfront in cash, an additional $500,000 in stock, and earn-out payments of up to $8 million based on future revenue thresholds. This transaction will mark Golden Leaf’s first entry into the U.S. market.

“Signing this LOI is another key strategic step forward for Golden Leaf, as we continue to execute on our plan to introduce our retail brand-focused model to the largest growth markets, both in the U.S. and internationally,” commented William Simpson, CEO of Golden Leaf, in a statement.

Also announcing a major acquisition today is Cannabis Strategic Ventures, Inc., which just completed the definitive agreement to acquire Worldwide Staffing Group, Inc. The company will acquire 100% of Worldwide’s issued and authorized shares and begin recognizing Worldwide’s revenue, which reached $1.5 million in 2017, upon the closing of the transaction.

Worldwide will continue to operate as an independent wholly owned subsidiary, providing employment and staffing services that are not related to the cannabis industry. However, the company will use Worldwide’s experience to eventually expand into cannabis industry staffing, particularly in the California market.

“The job demands in the Cannabis Sector are expanding into other job functions beyond the traditional Bud Trimmers and Bud Tenders. This acquisition better prepares us to meet the growth we are expecting through the end of this year, into next, and beyond,” stated Simon Yu, CEO of Cannabis Strategic Ventures. “We welcome Worldwide Staffing into the Cannabis Strategic portfolio.”


Peggi CloughPeggi CloughApril 18, 2018
420-1280x1280.jpg

5min16720

Of the nearly 5,000 people surveyed by legal cannabis delivery service company Eaze, more than half report they’ll be openly celebrating 4/20 this year.

Eaze asked their customers questions about their consumption openness when discussing their use and thoughts on celebrating their first legal 4/20 holiday in California.

Seventy-three percent surveyed reported the reason they’re celebrating 4/20 for the first time is that cannabis is now legal. About a quarter of Baby Boomers will be first-time celebrants. Sixteen percent of Gen Xers, 10 percent of Millennials and 12 percent of Gen Z adults will be partaking in celebrations for the first time this year.

Gen Z adults are most likely to post about it on social media, at 52 percent, and more surprisingly, Gen Xers are more likely to share on social media than Millennials, at 46 percent and 42 percent, respectively. Forty-seven percent of women report they’ll probably share about their 4/20 plans on social media, while only 42 percent of men will.

The trend of women being more forthcoming about their cannabis use also held true where their family and friends are concerned. They’re a bit more open than men when speaking about cannabis consumption, at 96 percent versus 95 percent. Almost all of the adults surveyed—99 percent—have shared about their use with friends, but they’re not as open with family members. Forty-seven percent of parents have told their children, with mothers being more likely to tell them than fathers, 61 percent to fathers’ 37 percent.

Seventy-two percent of adults reported that they’ve told their parents about their cannabis use. Baby Boomers are most likely to tell their parents, at 79 percent. The numbers went down with age: 75 percent of Gen Xers, 72 percent of Millennials and 67 percent of Gen Z adults have been open about their cannabis use with their parents. A quarter of people surveyed reported that they’ve used cannabis with a family member for the first time since its legalization.

Legalization has made it easier to talk to others about their cannabis consumption, according to 52 percent of respondents. Thirty-eight percent of women cited family concerns as the reason they’re not open about their use, 35 percent said career concerns and 32 percent stated medical privacy. Family concerns were the reason 62 percent of men are hesitant to speak about their use, and 68 percent said medical privacy.

Sixty-five percent of men reported career concerns prevent them from speaking freely about their cannabis use, yet they’re more open about their use with their colleagues and their supervisors than women tend to be. Baby Boomers are less likely than Gen Z adults to share their cannabis consumption with their boss, but only by a small margin, 31 percent versus 33 percent. Gen Xers were most likely at 40 percent, and Millennials were at 39 percent.

On the medical front, 70 percent of those surveyed have a friend or family member who’s benefitted from medical cannabis. This has helped 96 percent of them become more open with others about their own personal use.

 


StaffStaffApril 9, 2018
PLUS.jpg

3min41280

Palo Alto-based cannabis-infused edibles brand Plus Products closed an approximately $6M in Series B financing to expand its operations. The financing was led by Serruya Private Equity Partners (SPE) and Navy Capital Green Fund LP. The money from the capital raise will be used to fund rapid production capacity expansion, factory automation, working capital, and new product development.

“We are extremely proud of the products PLUS has brought to market,” said Jake Heimark, CEO, and co-founder. “We’ve quickly grown into one of the leading edible brands in California. With the proceeds of this round, we will continue to further our mission: to make cannabis safe and approachable for all types of consumers.”

Edibles have proven to be big winners among the recreational consumer in California. According to BDS Analytics, edible products have accounted for 18% of marijuana retail sales in February 2018 across licensed retailers in California. One of the biggest drawbacks with edibles is that consumers typically wait at least for a half hour for a response after ingestion. PLUS products are known for its rapid reaction. BDS Analytics also noted that PLUS ranked in the top ten sales for edible brands in California.

All of the PLUS products are produced in the company’s dedicated food-safe cannabis manufacturing facility in Adelanto, California. According to a company statement, the 12,000 square foot facility was outfitted for scalable food production with funds raised in 2017’s Series A round, led by The Green Organic Fund and Verde Mountain Fund.

“2018 is a historic year for California’s cannabis industry with the official launch of legalized adult use,” said John T. Kaden, Manager and Chief Investment Officer of the Navy Capital Green Fund. “PLUS is establishing a leading position in California and has assembled the right management team to execute and succeed in this complex regulated environment.”

In addition to its established lines, Plus Products has already begun launching limited edition products that capitalize on holidays like its Valentine’s day themed Rose & Vanilla gummies, which were available at select locations and through delivery services.


Debra BorchardtDebra BorchardtMarch 21, 2018
shutterstock_784662001-1280x720.jpg

6min20620

A new report suggests that the California cannabis market growth may be slowed due to heavy taxes and restrictive regulations. “California: The Golden Opportunity” written by Arcview Market Research in partnership with BDS Analytics writes that even the state’s revenue gains could be affected by the onerous tax and regulatory burdens that will drive consumers to the black market – exactly the opposite of what authorities wanted.

The report stated that the taxes and regulations amount to a 77% handicap versus the prices in the illicit market. California already had high sales taxes and now that is compounded by new cultivation and excise taxes. In addition to that, cannabis businesses are subject to the costs of navigating 40+ different types of state licenses. All of these costs ultimately trickle down to the consumer.

“While California cannabis companies are thrilled with the traffic increase they’ve seen since January 1 they can’t help but worry that regulations and taxes are going to handicap the legal market in the long term,” said Troy Dayton, CEO of the Arcview Group. “It’s clear that every additional penny of a price increase on legal cannabis products only serves to boost the attractiveness of purchasing from the illicit market which has flourished in the state for decades.”

To get an idea of how pervasive the black market is in California, the State Department of Food and Agriculture reported that cannabis cultivators (both legal & illegal) grew 13.5 million pounds of flower in 2016. However, residents only consumed 2.5 million and the rest was diverted to the black market. The bad players have little incentive to abide by the law because as part of the legalization process, punishment for breaking drugs laws have been lightened.

The report said that long-time illicit market customers were shocked when they saw the prices in legal dispensaries. Around 50% of California consumers surveyed in BDS Analytics’ “Public Attitudes and Actions Toward Legal Cannabis” reported buying cannabis from a friend, family member, or acquaintance. This market is big and very much ingrained in the state. Meaning there will be stiff competition between the legal and illegal businesses.

That competition isn’t helped when the legal operators are forking over higher taxes than in Colorado and Oregon with local municipalities adding their own taxes on top. A hypothetical $1,400 pound of cannabis effectively ends up costing $4,054 at retail and puts cannabis businesses at a serious disadvantage to the illicit players who have little overhead costs.

Ultimately the state could be cutting off its nose to spite its face with the extra regulatory and tax burdens. States have mostly legalized recreational marijuana so that they can reap the benefits of huge tax receipts. Cannabis sales in California are expected to hit $3 billion in 2018 larger than the states of Colorado, Oregon and Washington combined. The tax revenue is expected to exceed $649 million in 2018, so this is a significant source of income that the state will want to protect and grow.

While the numbers seem generous, they could be even bigger. The report notes that its forecast puts sales at $7.7 billion by 2021. “That sounds like a lot of growth, and it is, but the forecast is conservative compared to the post-adult-use legalization growth seen in other states. During the first three years (from 2017 through 2020), California’s market will increase at a compound annual growth rate (CAGR) of just under 29%—versus the 84% seen in Washington, 57% in Oregon, and 56% in Colorado during the first three years of adult-use in those states.” Still, the authors believe the politicians will be willing to make adjustments to ensure the success of the program.

“Rarely does a 20-year-old market undergo as radical a transformation in as short a time as California’s cannabis market did on January 1st of this year,” said Tom Adams, Editor-in-Chief at Arcview Market Research and Principal Analyst at BDS Analytics. “Suddenly, 29 million adults had access to the cornucopia of the modern cannabis store but were also suffering sticker shock from the state-imposed costs of going legal.”

On a positive note, the authors of the report believe that medical patients will be excited to see a new range of products available to them in the legal market. They also think that long-time black market consumers will find that the quality of the legal products is better and the options in the legal dispensaries more plentiful. Plus, there will be many consumers who did not want to engage in the illegal market, but now will be comfortable entering a legal dispensary.

In addition to the analysis of the illegal market, the report does a deep dive into all of the complicated regulations affecting the businesses, plus an exhaustive review of the various regions and counties.  It delves into the conflict of the inner state areas not wanting to be a part of the cannabis industry versus the coastal areas that seem to be all in.

 



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 3 days

Former High Times Writers Form New Magazine

@GreenMarketRpt – 5 days

⁦@KushCo_Holdings⁩ $KSHB Revenue Misses Analysts Estimates As It Drops 46%

Back to Top

You have Successfully Subscribed!