California's legal pot market falls $100M short of revenue estimates

California's legal pot market falls $100M short of revenue estimates
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California’s legal pot market has fallen around $100 million short so far this year in cultivation and excise tax collection, according to the Associated Press

Finance officials originally predicted the legal marijuana market could net the state up to $185 million in taxes over the first six months of cannabis's legalization. But California only collected about $82 million in taxes from legal marijuana sales by mid-2018, the AP reported. The state legalized marijuana in January 2018.

The numbers, according to the state's top cannabis regulator, point to challenges in pushing consumers away from the illegal marijuana market and toward seeking out its regulated counterpart.

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"After six months of legal cannabis sales there is a staggering ... gap between today’s tax revenue numbers and what voters were promised," state Assemblyman Evan Low told the AP. "Regulators must adapt before California’s lawful cannabis businesses are obliterated by the black market."

Some areas of the state have also banned commercial pot activity, meaning there are fewer places to obtain marijuana legally.

“Most of the state doesn’t have access to it,” Hezekiah Allen, executive director of California Growers Association, an advocacy group for marijuana farmers and businesses, told the AP. “The California marketplace needs significant change if it’s going to function ... primarily at the local level.”

The state Department of Finance in January predicted Californians would purchase nearly 1 million pounds of marijuana in the first year of its legalization, which would amount to $3.4 billion in recreational retail sales.

Recreational marijuana is legal in nine states and Washington, D.C., while medical pot has been legalized in 29. Some major U.S. cities like New York have also made moves to reduce the prosecution of marijuana cases.