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TALE OF THE TAPE: When it Comes to Cannabis, Oklahoma Continues to Sock it to California

By Beard Bros. Crew
TALE OF THE TAPE: When it Comes to Cannabis, Oklahoma Continues to Sock it to California
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California and Oklahoma – two very different states with very few things in common. One quality of life feature that they share, however, is that they each have a legal, state-sanctioned cannabis market.

In any fair fight, a Tale of the Tape is used to highlight each opponent’s base attributes and relevant statistics. The regulated cannabis markets in both states have been making plenty of headlines lately, not always for the right reasons, but despite the glaring differences between these two cannabis markets we wanted to match them up, head-to-head, to see which one is swinging hardest these days.

ROUND 1 – IF YOU BUILD IT…

Oklahoma instituted their medical marijuana laws roughly a year and a half ago in mid-2018, they currently do not have any provisions in place protecting or allowing recreational production, sale, possession, or use of the cannabis plant.

California operated in the quasi-legal grey area of Prop 215/SB 420 for nearly two decades beginning in 1996, forming the largest and most lucrative medical marijuana market that the world had ever seen. In November of 2016, though, that all changed with the passage of Prop 64, the voter initiative that established the state’s adult-use recreational cannabis laws and created a new taxed and regulated legal market for marijuana.

California’s new legal market has, so far, failed to meet anyone’s expectations. Legacy operators cannot afford to or qualify to enter the legal side and then struggle mightily to stay afloat if they do get in; savvy cannabis consumers are wary of supporting a new legal market full of brands they don’t recognize selling overtaxed weed they don’t want to smoke; and local and state officials banking on legal weed to boost their budgets are watching the street market rake in roughly triple the revenue… tax-free.

Perhaps the main difference between the approaches taken by the two states is the barrier to entry for those looking to enter the supply side of their legal market. From cultivators to manufacturers, to extractors, to retailers, California has failed to make these opportunities reasonably attainable.

For example, Mendocino County in the heart of the famed Emerald Triangle in Northern California boasted over 10,000 permitted cannabis growers just a few short years ago. Today, under Prop 64, that number hovers in the mid-600’s and the story is the same statewide where only 4,079 cultivation licenses have been granted in total.

In Oklahoma, in just a year and a half, 4,931 cultivation licenses have been issued along with 2,169 dispensary licenses to slang that cannabis through to the public. Compare that to just 591 licensed dispensaries in Cali as of September of this year. This translates into one legal dispensary for every 2,356 people in Oklahoma versus one legal dispensary for every 67,972 Californians. 

Prop 64 in California left way too much power in the hands of the individual municipalities (cities & towns) that make up the fabric of the state. Because of this, 75% of those municipalities now have explicit bans on any and all commercial cannabis activity within their jurisdiction despite the fact that nearly that same number of municipalities voted in favor of safe access to legal weed back in 2016.

Under State Question 788 in Oklahoma, no such local authority is granted so that no individual city, town, or county can enact zoning restrictions to prevent dispensaries from opening.

ROUND 2 – …THEY WILL COME

There are currently about 3.95 million residents in the state of Oklahoma. By contrast, there are over 4 million people in the city of Los Angeles alone, there are well over 10 million that call Los Angeles County their home, and more than 40 million residents in the state of California.

Industry insiders estimate that as few as 1 in 5 adult cannabis consumers in Cali get their bud from the regulated/legal market. We estimate that number is probably, finally, somewhat accurate. Why? Well there are allegedly 30 million adults in Cali. We have to shave that number down a bit since the state won’t let you buy legal weed until you are 21, but even 20% of 25 million is 5 million people allegedly hitting up legal, licensed dispensaries and delivery services for their cannabis. Remember that number…

In Oklahoma, on the other hand, a full 5% of the states TOTAL POPULATION are now registered as medical marijuana patients – the highest such percentage in the nation. They use that term ‘patients’ pretty loosely in the Sooner State, as there is no restrictive list of “qualifying conditions” so doctors can issue a recommendation for any reason they see fit. As a result, 210,000 Oklahomans and counting have signed up for legal weed, up from 25,000 this time last year.

So, we have an estimate that California has 5 million+ active cannabis consumers in their legal market, and Oklahoma has the easily trackable number of 210,000+. Let’s check the receipts.

ROUND 3 – MONEY FIGHT

Original estimates for California’s annual cannabis tax revenues flirted with the word Billion, with a B, but the bean counters got refried when the state had to revise its 2019 estimate downward to around $300 million, a number it still will not reach this year. That is based on disappointing total sales revenues that have yet to match the roughly $3 billion annually that the state was seeing under the banner of Prop 215/SB 420.

In Oklahoma, the state is expecting to see total sales revenues of $350 million this year of which the state itself could pocket as much as $50 million.

So, Cali appears to be bringing in roughly 10x the sales of Oklahoma which matches up relatively close to the disparity in the states’ populations.

JUDGES’ DECISION

So, is it fair to compare the two markets and, if so, which one comes out on top?

Well, for starters, Californians do not have to go to a doctor anymore to qualify to get cannabis. Secondly, it’s CALIFORNIA VERSUS OKLAHOMA for fuck’s sake! For these two reasons, this should be an easy knockout but Oklahoma stands its ground.

Clearly, the unregulated market in California is draining the potential of the regulated one, but it is the very taxes and regulations that differentiate them that provide that unregulated market with such a distinct advantage.  We have no doubt that if we could get accurate totals on the unregulated cannabis sales in each state, Cali would shine as it should, but instead those stats stay in the shadows.

Financially, this one appears to be a draw, but the mere fact that David is taking Goliath to the judges’ scorecards just might be the upset of the year.

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