Cannabis · Visalia/Tulare

Cannabis sales are coming up short. One Valley community is already adjusting.

Measure Q, otherwise known as the cannabis sales tax in Farmersville, is currently in its second year of harvesting revenue for the city. And as of late city administration  is realizing they may have to tamp down their expectations on the amount of green it can bring in.

From a staff report presented to Farmerville City Council on Monday, Oct. 10, the city’s 2021-2022 budget – that ended on June 30, 2022 – anticipated bringing in $1,450,000. But by the end of the fiscal year the city received 91% of their projection totaling $1,312,323. 

Although it is not cause for immediate concern, the $137,677 shortfall has changed the city’s expectation on what Measure Q can yield. As a result the city is anticipating $1.2 million in tax revenue from cannabis by the end of the 2022-2023 fiscal year. 

The report was presented by the city’s director of finance and administration Steve Huntley, who said the observable decrease can be attributed to the statewide market saturation of cannabis, where the demand for cannabis products just isn’t keeping up with supply.

“There’s more businesses entering and providing supply into the industry than demand,” Huntley said. “So the demand could be growing, but not as fast as the supply.”

This could create a potential conflict with council’s approval of a third dispensary in Farmersville, which when completed and open for operation, could have an impact on the market, according to Huntley. The decline in revenue for the cannabis tax can also be attributed to the state-mandated delivery of cannabis to an individual’s home regardless if a city allows dispensaries in their town, as well as ever-prevalent black market operations selling marijuana illegally.

Also according to Huntley, once the phase of market saturation is completed, the phase that is likely to come after is consolidation, where two or more companies merge together and become one. This could eventually result in larger, more successful cannabis companies buying out the smaller ones to keep up with the market. Huntley said the process is much like cutting a pie into smaller and smaller pieces.

“What that will equate for Farmersville, specifically, is that there’s going to be dispensaries that will just start earning less money,” Huntley said. “The more slices of the pie there are, the smaller there’ll be, but if you can buy other people’s slices, then yours gets larger.”

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Staff reports from The San Joaquin Valley Sun staff.