Thousands of California Cultivators Call it Quits Amid Wider Slowdown

While several segments have contracted, cultivators have taken the largest hit.

While it’s no secret that California cannabis companies have been struggling for years, it wasn’t until this year that the legal marijuana market actually began to shrink noticeably. Now it’s down by almost 29%, according to permit statistics from the state’s Department of Cannabis Control.

As of Oct. 24, the number of active business licenses in the state had dropped to 9,900, a decline of 28.5% since July 2022, when there were 12,719 active provisional and annual cannabis business licenses, the DCC reported.

The state market grew solidly through the COVID-19 pandemic, when stay-at-home orders and emergency checks helped bolster marijuana sales. In July 2021, the DCC reported 11,335 active business licenses – and the market grew by over 12% in the following year.

The biggest change was in the cultivation sector: In July 2021, there were 7,897 active marijuana grow permits, which jumped to 8,453 a year later, before falling to just 5,727 as of Oct. 24 this year.

The manufacturing and distribution sectors also took significant hits. There were 877 cannabis manufacturers in July 2021, which increased to 911 over the next 12 months, before diving to 768 this month. Among distributors, there were 1,168 in July 2021, 1,448 in July 2022, and just 1,297 this month.

Not all sectors have suffered the same level of exits, though. The retail, delivery, and microbusiness permit categories continued to grow steadily over the past two years, although industry sources say that new store openings have been offsetting closures of many other longstanding shops in cities that are saturated.

Recent examples include shops owned by Liberty Cannabis in both San Francisco and Los Angeles shuttered recently, marijuana consultant Hirsh Jain of Ananda Strategy noted. And multistate operators including Florida-based Trulieve Cannabis Corp. and Arizona-based 4Front Ventures Corp. have pulled out of California entirely due to the tough market conditions, as have many other smaller companies and brands.

Troublesome trends notwithstanding, retail storefront permits were at 774 in July 2021, shot up to 1,056 a year later, and as of this month there are 1,229, the DCC reported. Delivery licenses stood at 322 in July 2021, increased to 475 in July 2022, and now appear somewhat stable at 477. And microbusiness permits – which are often retailers – were at 297 in July 2021, grew to 376 by a year later, and now stand at 402.

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.

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