If you want to get into the cannabis industry in California—where more than $5 billion worth of legal, adult-use cannabis is on pace to be sold this year, according to tax figures—and you want to do it quickly, don’t bother with selling adult-use cannabis. Instead, you want to grow it.
Most cities in the state still don’t allow retail adult-use sales. Many of those that do cap the number of dispensaries allowed within city limits. And almost everyone running a retail storefront says that high taxes and an abundance of cheap, illicit-market weed is killing them. It’s not a good way to make money!
The quickest way to get into the cannabis business, then, is to get a cultivation permit and start growing massive amounts of cannabis. That’s what big companies in the Salinas Valley and Santa Barbara County did.
And what they’ve done, according to interviews with industry experts, is grow entirely too much cannabis. Exact figures are not known, but according to one rough estimate, California’s legal cultivators grow more than three times as much cannabis as is sold in legal dispensaries.
Whatever the exact figure, the common belief is that it’s so much cannabis that the market is flooded, prices are crashing, and legal growers—in the red this year—may finally be forced out of business.
“It’s gonna be a bloodbath,” said one industry insider, who works in wholesale sales and distribution, speaking on condition of anonymity in order to speak freely.