top of page

As San Diego’s cannabis tax revenue plummets, officials blame illegal market, new competition

Inflation may be driving customers to illegal delivery services, which can charge less because of lower overhead, fewer regulations.


OG Article: here.

View our Fair Use Policy: here.


Revenue from San Diego’s cannabis tax has been dropping sharply in recent months as the city’s two dozen dispensaries face growing competition from delivery services and new dispensaries in other nearby cities.

San Diego officials say they now expect cannabis tax revenue to be 23 percent lower than they had previously expected during the ongoing fiscal year that ends June 30 — $19.8 million versus $25.7 million.

Industry leaders say the primary cause of their “double-digit” drops in sales is illegal delivery services, which they estimate make up about half of the region’s cannabis market.

“The legal industry is facing huge competition from the non-legal industry,” said Phil Rath, executive director of a group of dispensaries called the United Medical Marijuana Coalition. “Delivery services are an ongoing enforcement challenge for the city.”

City officials say another factor is that several other local cities, including Chula Vista and La Mesa, have been starting to allow legal dispensaries after years of banning them.

“Up until recently, we had a monopoly,” said Ricardo Ramos, the city’s deputy director of business operations. “Now we’re competing with all these other jurisdictions.”