California’s struggling legal cannabis industry is expected to grow this year to $3.1 billion, but it remains outmatched by a thriving illegal market ripe with bargains, a report concluded Thursday.
Consumers are spending roughly $3 in the state’s underground pot economy for every $1 in the legal one, said the report from industry advisers Arcview Market Research and BDS Analytics .
California kicked off broad legal sales in 2018. But hefty tax rates and illicit sales have been blamed for slower than expected activity in the new licensed market.
The report projected sales in California — the world’s largest legal pot market — would grow 23 percent this year.
Companies that survived a rough 2018 “are battle hardened and kicked off a merger and acquisition flurry in the first half of 2019 that will allow them to leverage their positions in California to compete across the country,” Troy Dayton, CEO of the Arcview Group,