Cannabis sales slow in Washington

PIERCE COUNTY, Wash. — When Washington first legalized recreational marijuana in 2012, a new industry opened up for the state.

Since then, recreational cannabis retail has grown into a multibillion-dollar industry, generating hundreds of millions of dollars in tax revenue.

But new numbers from the Liquor and Cannabis Board show that growth may be slowing down.

In Pierce County, cannabis retail sales from the 2022 fiscal year dropped around 12% from 2021.

It’s a trend that’s being seen statewide. Retail sales from the 2022 fiscal year showed an 8% decline over 2021, equaling around $120 million in unearned revenue for Washington.

The state’s Liquor and Cannabis Board called 2021 an anomaly and credits the year’s high sales to Washington’s stay-at-home restrictions increasing consumption. The board added that although sales are lower this year compared to 2021, sales have been rising consistently since cannabis stores first opened back in 2014.

However, Duane Dunn, owner of Emerald Leaves Dispensary, says it’s more complex.

First, illegal markets are cutting into the sales of legitimate retailers.

“When you have customers who can purchase products from some of the same vendors that I use at a cheaper price, it makes it a little more difficult for those customers to come back into the store,” Dunn explained.

A recent report from the cannabis data firm Headset also found the average consumer purchase of cannabis goods in Washington dropped by nearly three dollars, from $34.14 in July 2021 to $31.41 in July 2022. Dunn says he’s seen dispensaries struggle to adapt.

“The overall product itself has dropped in value,” Dunn says. “When you get to that point where you’re doing 30% off for a product, there’s very little margins in that.”

Dunn says many smaller retailers are also struggling to expand, due to restrictions such as not being able to deliver their products.

He also points to the state’s 37% tax on cannabis sales, the highest in the country, which could determine if some of the smaller retailers stay in Washington.

“You start seeing companies consolidate, move out, sell, looking for greener pastures because the taxes are ridiculous,” he said. “It’s not as profitable as it used to be in the first five years. I can sell my license and go to another state and I can actually make a comfortable living, because that’s all people want to do.”

Dunn hopes the state is more proactive in addressing this dynamic before it’s too late.

“If they’re reactive to this scenario, then the landscape is going look like this: you’re going to have a few major players that own most or all of the major assets when it comes to the retail stores…and I don’t think the state of Washington wanted to see that scenario.”