UP IN SMOKE: ‘Complete failure:’ California pot industry hits another grim milestone.
California’s legal cannabis market has hit another grim milestone: There are now 10,828 inactive and surrendered pot licenses in the state and only 8,514 active ones, meaning dead pot licenses now outnumber active ones, according to the Department of Cannabis Control’s data dashboard.
This inversion comes seven years after the legal cannabis market opened. While it’s not clear exactly when the threshold was crossed, because the state does not release historical licensing information, California’s legal market has been struggling for years, with thousands of companies going out of business.
Jonatan Cvetko, a cannabis advocate and executive director of the United Cannabis Business Association, said the figures show that state regulators and the entire regulatory framework for cannabis in California is a “complete failure.”
“We’ve finally hit a threshold where we’ve seen the number of participants who have come into the industry who have failed outweighs the number of people succeeding, and succeeding is probably too strong of a word,” Cvetko said.
Company failures are certainly not unique to the legal cannabis industry. Startup companies in the technology market are notorious for failing the majority of the time, with one 2023 study estimating that 75% of all venture-backed tech companies fail within five years. And one 2016 study found that roughly 20% of new restaurants in the Los Angeles area failed between 2003 and 2008.
But Cvetko said business failures in California’s cannabis industry are especially bad because California’s legal market has only a fraction of operators today compared with California’s medical market that existed prior to legalization.
“This is not anywhere near what we see with restaurants, because we already had an industry in California, and California destroyed the industry that we had,” Cvetko said.
To revise and extend the remarks by the late P.J. O’Rourke, you can’t get good Chinese takeout in China, Cuban cigars are rationed in Cuba, and legalized marijuana is failing in California. That’s all you need to know about communism.