A global pandemic, record job losses and massive budget shortfalls all contributed to what California Gov. Gavin Newsom called “no normal year” in his May budget revision – and cannabis tax revenues are just one of the victims of the serious “rainy day.”
Whether in good times or bad, tax revenues are a good indicator of consumer trends in the legal market – and cannabis business operators will be keeping an eye on how the industry reacts to recession.
For example, the state said in budget projections that while products such as alcohol and tobacco are recession-resistant, marijuana businesses will be more negatively impacted by the pandemic because of:
- A lack of access to banking services.
- A younger, more recession-prone customer.
- Continued competition from the illicit market.