- The Washington Times - Thursday, August 15, 2019

California’s legal marijuana industry is set to generate $3.1 billion in sales in 2019 following a shaky start for the state’s recreational pot program, a report said Thursday.

An increase of 23% over 2018, the first year California allowed adults to legally purchase marijuana for recreational purposes, the surge has helped the state effectively become the “world’s largest legal cannabis market,” analysts for Arcview Market Research and BDS Analytics wrote in the report.

Marijuana sales remain rampant on the black market, however, where illicit transactions this year are expected to reach $8.7 billion, according to the report.

California became the first state in the country to legalize medical marijuana in 1996, and 20 years later it joined the growing list to legalize recreational pot, paving the way for licensed retailers to begin selling to adults starting in January 2018.

Stringent testing regulations and local bans imposed in certain parts of the state have resulted in a rocky first year for California’s legal marijuana industry, however, the report noted. Legal sales went from $3 billion in 2017, when only medical marijuana could be legitimately purchased, to $2.5 billion in 2018, according to the report.

“Despite the burdens imposed on the legal market by regulators, with a $2.7 billion gross domestic product, California has the world’s largest legal cannabis market and will continue to until federal legalization makes it merely a part of the larger U.S. market,” said Tom Adams, Arcview’s editor in chief. “At that point, California will assume its usual place in the world economy as a major exporter of agricultural commodities and their derivative products, a technology mecca and consumer product trendsetter.”

Marijuana is federally prohibited on account of being classified as a Schedule 1 drug under the U.S. Controlled Substances Act. Thirty-three states have defied federal prohibition by legalizing marijuana to varying degrees, including California and six others with laws currently in place allowing adults to purchase taxed and regulated pot from licensed retailers to be used recreationally.

Jerry Brown, the governor of California when the state legalized recreational sales, had previously predicted that legal marijuana would earn around $643 million in tax revenue for the state during the fiscal year that ended July 1, 2019. His successor, Gov. Gavin Newsom, significantly downgraded that projection in January to $355 million after the first few months of legal sale fell shy of expectations.

• Andrew Blake can be reached at ablake@washingtontimes.com.

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