It’s common knowledge that California is the biggest market for legal cannabis sales. Being the biggest and most populous state, this makes sense. But with this fact, many new brands see entering the California market as an impossible feat.
On the flip side, a growing number of brands see the flourishing market not as a barrier to entry but as an opportunity to capitalize on the market that’s thriving the most.
So, to help your brand strategize for the future (and not get left behind!), we set out to answer the question: is the California cannabis industry really that saturated? Keep reading for an insider’s POV and all the facts on the latest California cannabis trends and sales data to put the rumors to rest.
An Insider’s Look at California’s Cannabis Market Share
“You can infuse so many different products with cannabis, the amount of cannabis products is essentially unlimited,” says Ken Hwang, attorney, and co-founder of My Green Network. And that reigns true, even in California. Brand differentiation is crucial in a state the size of California, which boasts a massive cannabis market share. In Q2 of this year alone, California’s taxable adult-use cannabis sales reached $1.2 billion, a 2.9% increase from the quarter prior.
California cannabis trends also show that consumers are craving differentiation, too, as people’s preferences slowly move away from traditional flower and toward more advanced and creative ways of consuming cannabis. For instance, the state’s pre-roll category is experiencing exponential growth, with sales shares increasing by 21.6% from June 2021 to May 2022.
Other notable product category sales to note in this same time period, include –
- Edibles, growing by 11.8%
- Capsules, growing by 22.3%
- Vape pens, growing by 12.6%
“Retailers are always looking for new types of products to try for their customers, too,” adds Hwang. But it’s not just sales and consumer demand that are propelling the state’s cannabis market forward. There are other key and calculated factors at play, too. So, without further ado, let’s get into three more of the top reasons brands are increasingly capitalizing on cannabis sales in California, despite fears of saturation.
Voters are approving local retail growth
One thing that originally set California and other state markets back was the fact that local jurisdictions could opt out of sales. However, as stigmas begin to slowly diminish and locales see the financial gain of legalization, they’re quickly changing their minds.
In November of 2022, California residents made their voices heard with over a dozen cannabis ballot measures approved across the state. In the end, the wins are expected to translate to over 70 new retail licenses, allowing more sales to be made and even more customers to enter the market.
The state is cracking down on the black market
No matter how long legal markets have been around, the black market will always be a problem. In California, industry experts report that roughly 55% of all cannabis sales are made within the state’s illegal market. That means, if it’s to be tamed, the $5.2 billion in revenue that the state saw in 2021 could potentially double.
This is a fact that the state is very well aware of and is taking strides to eradicate—more so than other states. This year alone, the California Department of Justice’s annual “Campaign Against Marijuana Planting” program was successful in eliminating nearly one million cannabis plants and seizing more than 200,000 pounds of processed material. Even more, the program was recently greenlit to work year-round in the fall of 2022.
Interstate commerce is on the horizon
This fall, Governor Gavin Newsom signed several cannabis-related laws into place, including one that opens up the doors for future interstate commerce. Senate Bill 1326 creates an interstate commerce agreement pact and gets rid of a long-standing ban on moving and selling cannabis products across state lines.
Even though the action will require specific criteria to be met, like federal reform, it sets up the state to be at the forefront of the movement once it occurs. It also adds to the momentum and discussion of interstate commerce, with neighboring legal states now permitting adult use and medical sales, like Arizona and Nevada.
Increased delivery will boost purchasing
Along with the passed bills for future interstate commerce came new state laws for delivery expansion, too. The SB 1186 measure requires cities to adopt new ordinances by January 2024 that expand access to medical patients through delivery to patients directly or their primary caregivers.
While California often sets the trends for the states, Canada is the country that sets the standards for legal markets and is typically the precursor to what happens here. So, if the new Uber Eats delivery deal in Toronto tells us anything, it means it’s only a matter of time before on-demand consumer delivery makes its way into the Golden State, too.
“Delivery is the way. Older generations do not want to go to shops. While the younger generations are already familiar with delivery for everything,” adds Kenton Wong, co-founder of My Green Network
How to Break Into California Cannabis Trends
If you’re from out of state, out of the country, or even in-state, there are ways to get your products on the shelves without the traditional hoops to jump through. Again, thanks to the state of California and its expansive collection of licensing types. The Type-S license is unique to the state and permits licensees to make legal cannabis products in a shared manufacturing space.
My Green Network serves as the state’s premier cannabis cloud kitchen for contract cannabis manufacturing, private-label edibles or goods, and cannabis white-label product production. The facility allows brands to make, package, and sell their products directly to dispensaries through their retail partners without having to pay for licensing, facilities, and equipment upfront.
“We selected My Green Network because they are small enough to give us personal attention but big enough to scale number one. Number two, they have an incredible amount of technical expertise relative to putting our products together, and it’s really a question of precision,” says John Masis, of En-Tranced, who recently launched the brand’s oral Canna-Mizer in California after starting in the Maine and Massachusetts markets.
So, to finish and answer the question, is the California cannabis industry really saturated? Yes, but as you can see from what you learned today, there’s plenty of cannabis market share and growth to take advantage of. Become the next cannabis manufacturer in California with My Green Network and schedule a tour of our state-of-the-art facility, today.
