Pot Industry in Washington cooling
Washington state is reporting that cannabis sales slowed this year for the first time since legalization in 2014. Washington legalized adult-use sales 10 years ago.
Until recently, the market has been a success. Retail marijuana sales declined 8% from 2021 to 2022, a loss of about $120 million in state revenue.
The industry is still a nontraditional approach to business due to the federal government not being fully onboard with the sale of pot. Some of the challenges to local weed companies include high taxes, a lack of access to capital, low wholesale prices and limited social equity opportunities for minority marijuana entrepreneurs.
California, Oregon and Colorado are all going through similar sales trends. As Washington’s recreational marijuana industry has grown and matured over the past decade, some of the primary issues today include:
-The state’s residency requirements hinder outside investment.
-Low wholesale prices. Small cultivators confront an oversupplied flower market
-A lack of access to capital
-Limited social equity opportunities for minority cannabis entrepreneurs
The 2022 MJBiz Factbook estimates adult-use sales in Washington state retail stores this year at $1.5 billion-$1.7 billion and reaching $2.3 billion-$2.5 billion by 2026. A study by Seattle-based data analytics firm Headset found that the frequency of marijuana purchases at retail stores and the money people are spending has been declining.
In Washington state, the average consumer purchase of marijuana dropped from $34.14 in July 2021 to $31.41 in July 2022. Washington state’s cannabis businesses seem to be more focused on safety challenges, including ongoing store robberies that was reported here on the Seattle Medium, and preparing for the potential of interstate marijuana commerce.
There is social equity which some believe is gaining more traction in the Washington state market. However, according to data self-reported to the LCB in 2020, less than 20% of marijuana retail owners identified as minorities. Social equity may also include smaller cash strapped companies which usually get pushed out of the market by larger companies.
