Licensed California Marijuana Stores Cut Prices as Business Booms

The 88 California licensed recreational marijuana stores began the New Year with price-cutting and big sales volumes.

Proposition 64, passed by California voters in 2016, directed the state’s Bureau of Cannabis Control (BCC) to begin issuing licenses to recreational marijuana retailers on Dec 1. But with only 44 recreational licenses issued by Dec. 29, BCC worked through the weekend to push the number to 88 by midnight on December 31.

MedMen in West Hollywood kicked off the New Year’s Day recreational marijuana launch by selling an eighth of an ounce of high quality cannabis buds for $35. That was down from $50 for the same eighth of an ounce of “weed” that so-called medical marijuana dispensaries were offering the day before for the same quality product.

The 44 legally licensed recreational marijuana shops across the state were posting images of enthusiastic customers waiting in lines extended several blocks in some cases. As one of just four shops licensed to sell recreational marijuana to the 10.2 million residents of Los Angeles County, MedMen seemed to be the most active on New Year’s Day.

MedMen vice president Daniel Yi told local ABC affiliate ABC 7: “We’ve been preparing for this for months, if not years.” Yi added that MedMen had gone from 40 employees to 400 in anticipation of the legal recreational marijuana boom.

Customers seemed impressed with the store’s clean lines and well-lit product displays. With shoppers toking up on the sidewalk in front of MedMen, a parked “roach coach” was doing a thriving business selling coffee and high-sugar content doughnuts.

In Orange County, the 420 Central shop, located in an industrial area of Santa Ana, set up outside speakers that were blaring “Groove on! Groove on!” for its 7 a.m. New Year’s Day opening. Almost one hundred recreational marijuana customers at a time mobbed the store, and hundreds lined up despite the chiller morning weather.

420 Central told Southern California Public Radio that the company added five checkout terminals and expanded its showroom. Six newly hired “budtender” sales associates were also giving customers tutorials regarding product selection and quality attributes.

In San Diego, the Urbn Leaf claimed that it had served 800 customers by sunset on New Year’s Day, and still had about 170 people still lined up to shop. That was about triple its normal medical marijuana volume. Co-founder Will Sean told the San Diego Union Tribune, “I really underestimated what would happen.” Sean added that he used 27 drivers on New Year’s Day so that he could make 20-minute deliveries.

The BCC projected that a legal cannabis industry would grow at about the same 28 percent compounded rate for the roll-out of Internet broadband access, generating $6.6 billion in legal cannabis sales and supporting 100,000 private sector jobs in 2018.

New Year’s Day marijuana sales were a huge success, but legalized recreational marijuana and hemp sales are subject to an excise tax rate of 15 percent on sales, plus a cultivation tax of $9.25 per ounce for flowers, and $2.75 per ounce for leaves. At a $6.6 billion sales level, California expects to collect over $1 billion in 2018.

The novelty of legal recreational marijuana shops discounting their normal medical marijuana prices by 30 percent may have caused huge first-day boom. But with illegal street dealers still charging less $20, prices will have to continue to fall to remain competitive.


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