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Washington Recreational Marijuana Sales Numbers Decline For First Time

marijuana clubs washington
(image via katu)

The State of Washington legalized recreational marijuana in November 2012. But it wasn’t until July 2014 until recreational marijuana sales started. After the delayed start of recreational marijuana sales, recreational marijuana sales numbers in Washington climbed steadily month after month. That streak ended last month when sales numbers took a dip in Washington for the first time. Per Marijuana Business Daily:

Retail shops reported $31.4 million in cannabis sales in July, down almost 6% from June, according to data from the state Liquor and Cannabis Board.

Monthly sales had risen dramatically this year until July, more than doubling from January through June as the market hit it stride and more shops opened up.

Despite the July dip, sales so far this year total around $170 million, putting the state on pace to surpass $300 million for the year.

The total amount of excise tax due at the retail level rose by about $3.3 million after Washington State revised its tax structure at the start of last month.

This is good news and bad news for the State of Washington. The good news is the numbers are still high, and significant enough that no one should worry based off of the dip in sales numbers alone. The bad news is that this could just be the start of the decline of recreational marijuana in Washington. My home state, Oregon, is going to start recreational marijuana sales via established dispensaries on October 1st.

Once that happens, I don’t know that anyone is going to be traveling across the Columbia River from Oregon to Washington to purchase recreational marijuana because it’s going to be so much cheaper in Oregon. Washington sells grams for $19, whereas I’d expect Oregon to be as cheap as $5 per gram. If anything, I expect people from Washington to start coming to Portland for their marijuana. I know a couple of people that drove to Washington to purchase a symbolic legal gram or two, and they got such sticker shock and were so unimpressed with the flower that they bought that they couldn’t help but wonder why any Oregonian would make the journey to Washington for marijuana as is. Washington has the worst marijuana legalization law in the country, and it needs to be fixed.

  • A high tax State next to a low tax State? It should be interesting.

  • SilentPatriot

    Correction: Washington has the worst legislators (who don’t respect or care about the vote of the people) in the country, and they need to be replaced.

  • MJalltheWAY

    Most analysts are contributing the dip in sales to the change in taxes and the fact the prices are continuing to drop. The number of transactions stayed relatively the same, but the average sale receipt dropped. This probably indicates that market has leveled off to a certain degree, although I expect that to change once the Medical shops are absorbed into the recreational market.

    And sure there is pot being sold at the $19 price point, but not all of it is. Stores are regularly putting out decent quality product in the $9-$12/gm range.

    $5 grams are a pipe dream of the hippy dippy marijuana enthusiast. I’d like to introduce you to my friend Capitalism where people start business to make money. If you think between growers/processors and retail stores that they can turn any sort of profit margin (remember there are things like rent, taxes, payroll, L&I, transportation, insurance, and more costs to consider) on a $5 gram you probably need to take a basic business/economics class…

    • newageblues

      “$5 grams are a pipe dream”. In Oregon, apparently not.
      As far as Washington goes, let’s start at the beginning. How much does it cost a grower to produce quality weed legally in WA state?

      • MJalltheWAY

        I don’t know what the “real” cost to produce is (I’ve never worked for a farm), but I do know the wholesale price of a gram (from grower to recreational store) under the new tax structure (no taxes until point of sale) is about $2-$4/gram depending in quality, and that includes only a small profit margin for the grower.

        People forget that its not cheap converting from a semi-legal grow op to a fully functioning and regulated business. It costs nearly $1mil (or more) in capitol to begin a tier 2 or tier 3 operation in Washington. And since investors tend to want to make their money back (and not in 30 years), that initial cost has to be factored into profit margins.

        Add to that the margins needed to operate a retail location, and that $2-$4 turns into$8-$10 pretty easily. And that’s the baseline. Growers who consider their product “top shelf” (and at first EVERYONE will) will charge a higher premium for their products. (http://www.oregonlive.com/business/index.ssf/2015/08/marijuana_growers_focus_on_bra.html)

    • Kaya Jackson

      Oregon doesn’t have the same restrictive framework like wa you could easily produce outdoor and sell it for that price especially if retailers can produce.

  • Bongstar420

    Them folk crazy….its just the “consumer” giving their old dealers a holla back. It must be nice to be black marketing in WA. Cause in WA, the grower is gettin $1500lbs and they are slingin for something round $6000lbs.

    Ya, Oregon is gonna be no tax Oct-Dec, 25% Jan-Oct, then 17% with annual cost of living adjustments. Oregon dispensaries may be able to keep the prices down, but current prices are probably propped up by exports which may not continue unabated. Most of the dispensaries are drooling to get into that market as “medical” is over stocked ;)

    http://www.cannabisbenchmarks.com/weekly-report.html

  • Dave Jensen

    Johnny, please join us in the renaming of marijuana to it’s original, non-slave name, cannabis! Please and thank you :O) Love your articles, appreciate your passion too.

  • rale

    37% tax at the point of sale is a joke and isn’t working. I stopped buying at rec shops after my first trip after this tax went into effect. Good job bridging back the black market Inslee.

    • MJalltheWAY

      That’s a pretty bold move considering the change to 37% was actually a reduction in taxes from the three tier 25% taxes we had before (75% total)…

      • Joshob1987

        except the customer is paying the 37% instead of the processors, growers and retailers each paying 25%, all of whom can afford it without pissing off customers.

      • rale

        25%tax x 3 was the responibilty of the grower, producer, retail. Now they don’t have to pay that so in theory the price per gram should have dropped at whole sale that doesn’t seem to have happen . 1/8 at my local shops that were 40 are now 45 or higher. one of the shops I go to raised most of the 1/8 prices to as high as 60 to 65. I haven’t seen those prices since the first time I went to this shop last November. Regular gram prices average 16 to 18 bucks per. Doesn’t seem very bold to go where it’s a flat 10 bucks a gram.

  • Kaya Jackson

    Boycott 502 until we get real legalization. I hope there sales drop further they have no one to blame but themselves. We know the 502 stores/producers that are members of the wa canna business association lobbied to kill medical cannabis in hopes it would drive up their profits. The legislature saw nothing but dollar signs and didn’t fix 502 or adjust existing laws on the books. They did shift the tax to consumers just like 502 lobby wanted. Oregon doing it right and they even fixed laws while removing past cannabis offenses from people arrested during prohibitions. wa will be a failure because they alienated a lot of there potential consumers. I think we are also the only state that hired an anti drug think tank named BOTEC to draft rules and regulations instead of talking to local experts that know the market here.

  • Joshob1987

    Of course sales took a dip and they are about to decline even further with an extra 37% tax passed onto the customer when it was already more expensive than the black market. There is no legal industry without customers so Inslee can go fuck himself and i will go back to my dealer just to avoid that shit. At least prices were reasonably competitive for one year but that is all over now.

  • Derp

    You’re doing it wrong, that’s why. I’m not paying these prices. Fix it!