The California Cannabis Market 2024 Report attempts to paint a picture of industry stability, citing increased biomass production and rising wholesale flower prices as signs of a healthy market. But these numbers obscure a harsher reality: the state’s legal cannabis industry is stalled, manufacturing is collapsing, and much of the market (biomass and consumers) is being siphoned off by illicit operators.
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False Optimism, Flawed Metrics
The report claims the “gross value of the industry increased by 7.5 percent” in 2024 based on an 11.8 percent rise in biomass production and a 4.8 percent increase in biomass prices. Yet, these figures tell only part of the story. Taxable cannabis sales fell from 2023 to 2024, according to the California Department of Tax and Fee Administration (CDTFA). This is a crucial contradiction: if legal production is truly growing, why aren’t consumer sales keeping pace? Where’s all that extra cannabis going?
The answer is obvious. Much of this surplus biomass is being diverted into illicit THC products falsely labeled as “hemp,” which are openly sold in violation of state law. This diversion inflates wholesale prices while leaving licensed businesses struggling. Simply put, unregulated operators are buying up licensed biomass and undercutting licensed manufacturers.
Instead of confronting this crisis, the report presents an overly optimistic outlook that fails to account for the fundamental imbalance destabilizing the industry.
The Collapse of Cannabis Manufacturing
One of the report’s most misleading claims is that the estimated 28 percent decline in manufacturer licenses represents market “consolidation.” But there’s no evidence of major brand mergers or acquisitions. The reality is much bleaker: California’s licensed cannabis manufacturing sector is collapsing under regulatory pressure, excessive taxes, and unfair competition from unregulated THC products. Brands aren’t consolidating—they’re closing their doors.
If this trend continues, California risks losing its position as a leader in cannabis innovation. Instead of a thriving, diverse industry, cannabis in California is becoming a mere commodity, driven by underground market forces rather than legitimate business growth.
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The Myth of “Hemp-Derived” Cannabinoids
Perhaps the report’s most glaring error is its claim that “cannabinoids derived from hemp are generally cheaper than those derived from cannabis due to fewer (current) regulations.” This is demonstrably false.
Producing THC from hemp requires roughly 50 times the biomass needed for cannabis-derived THC extraction. The only reason these products appear cheaper is that THC-rich biomass — functionally indistinguishable from cannabis—is being mislabeled as “hemp” to evade taxes and regulations. The state’s failure to crack down on this is directly harming licensed operators.
The report suggests that “hemp market integration” will be important for the cannabis industry’s future. In reality, the unchecked proliferation of illicit THC products masquerading as “hemp” is destabilizing the legal market and driving its decline.
The Path Forward: Enforcement, Tax Relief, and Consumer Access
The California Cannabis Market 2024 Report correctly acknowledges some major issues, including the need for alternative enforcement funding and the burden of excessive taxes. But half-measures aren’t enough. The state must take decisive action:
- Stronger enforcement against the illicit THC market operating under the “hemp” label.
- Targeted tax relief for licensed cannabis businesses to allow fair competition.
- A focus on consumer affordability and access, rather than cherry-picking production statistics to mask deeper problems.
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Without real intervention, California’s legal cannabis market will continue to deteriorate while illicit operators thrive. The state cannot afford to ignore the growing disconnect between production numbers and consumer sales. If California wants a stable, successful cannabis industry, it must address the full supply chain — not just the parts that make for a reassuring report.
*This article was submitted by a guest contributor. The author is solely responsible for the content.