Cannabis revenue once again coming in low as Fresno prepares to tighten budget

Fresno could have some lean years ahead, reflecting current economic realities.

Current budget projections have Fresno seeing red in Fiscal Year 2025 as sales tax revenue slows down and cannabis revenue once again falling short of expectations, according to the city’s mid-year budget review presented to the City Council on Thursday. 

Poor cannabis revenue doesn’t come as a surprise to the council, however, which questioned the projections last June when the city kicked off its budget process. 


The big picture: Fresno Budget Director Henry Fierro told the city council that the city is experiencing slower sales tax revenue growth compared to the budget because of current economic conditions. 

  • The city projected $458 million in total operating revenue and is looking at an actual number of $463.2 million. The estimated ending balance, however, is expected to be $626,900. 
  • City Manager Georgeanne White said the city’s projections for Fiscal Year 2025 are currently for a deficit, necessitating the city to expand on the $626,900 surplus to help provide a cushion. 

Go deeper: The city’s adopted budget projected $153.6 million in sales tax revenue. The actual total will come in at $148.5 million, however. 

  • Fresno is not seeing red this year thanks to higher revenue from property tax, coming in $4.7 million over projections – 7.84 percent growth instead of the expected 4.25 percent. 
  • But the city’s cannabis sales tax revenue is falling short. The city projected $5.38 million in the budget but will only end up with $2.26 million. 
  • White said the city has seven dispensaries operating, although only two of those have been open for more than a year. Two dispensaries opened in January, following one in December. 

What we’re watching: White said the city administration plans to return to the council in March to present a five-year general fund projection, digging deeper into the forecast and efforts to avoid a deficit. 

The backstory: Last year’s mid-year budget review was essentially the same story as this year along the cannabis front. 

  • Similarly, the city initially budgeted $5.3 million in cannabis sales tax revenue in Fiscal Year 2023, but the mid-year review adjusted it to $2.1 million. 
  • In June, at the beginning of the budget process for Fiscal Year 2024, Councilman Miguel Arias took issue with the $5.38 million projection, saying at the time that the council keeps being asked to adopt budgets that assumes revenues coming in that has yet to materialize. 

What they’re saying: “This is sobering,” Councilman Mike Karbassi said. “I mean we’re a lot better off than the state right now, but at the same time this isn’t great news.” 

  • Mayor Jerry Dyer pointed the blame for lower cannabis revenue in part because of the illegal cannabis market in Fresno. 
  • “One of the things that holds us back, quite frankly, is the illegal sales of marijuana in this city,” Dyer said. “And until we curtail the illegal sales, they’re not going to be going into the legal cannabis market. So we have to do a better job as a city, and then I think you’re going to see the revenues continue to climb once they get open.” 
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