Home U.S. San Francisco Cannabis Sales Plummet Due to Black Market Competition

San Francisco Cannabis Sales Plummet Due to Black Market Competition

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Cannabis sales in San Francisco have dipped below the $50 million mark for the quarter for the first time in five years, according to California tax officials. 

The city reported $46.7 million in taxable cannabis sales in the first three months of 2024. This reflects a $5.6 million decline from the previous quarter and a $7.1 million drop from the same period in 2023, the San Francisco Examiner reported

Customers maintain social distance while waiting to enter The Green Cross cannabis dispensary in San Francisco, Wednesday, March 18, 2020. (AP Photo/Haven Daley)

The latest figures from the California Department of Tax and Fee Administration indicate a 35% decline since its peak in mid-2021. In spite of sluggish sales, San Francisco remains a leader in per-capita cannabis sales, generating $55 in sales per resident. San Diego recorded $134.1 million in sales for the first quarter, with $40.73 in sales per resident, while Los Angeles reported $295.3 million in sales with $30.05 per resident. 

Gov. Gavin Newsom has frequently touted California’s status as the largest legal cannabis market globally and has highlighted San Francisco’s Amsterdam-style cafes, but numerous dispensary owners report increasing business struggles. 

For months, owners have noted difficulties in attracting customers and complain about the inability to compete with black market operations. 

“We’re charging our customers way too much,” said Nate Haas of Moe Greens Dispensary & Lounge to CBS News Bay Area. “As a dispensary, it’s tough for us to compete with the illicit market.” The industry also faces market saturation and a significant post-pandemic decline in customers. 

“Our revenue has dropped 43% in the last 18 months,” said Al Shawa, who owns Mission Cannabis Club on Mission Street near 21st Street, a neighborhood fixture since 2010, to Missionlocal.org. 

Shawa also owns two additional dispensaries opened in 2023, one in the Marina District and another in the city’s Russian Hill area. 

“There’s no money to be made,” he stated. 

Neither store is performing well. 

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