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Whether you are a local legislator,  cannabis advocate or investor looking to launch or expand licensed cannabis in your city,  our first annual cannabis economic impact report details the positive economic impact cannabis can have on not only tax revenue but also employment, law enforcement  and public health costs.

In January 2021, Cal State University San Marcos (CSUSM) Office of Business Research and Analysis released an economic impact report (EIR) on the cannabis industry in San Diego titled Economic Impact of Cannabis in San Diego County. This report, the first of its kind for the region, used public records from three of the eight cities in San Diego County that allow commercial cannabis: La Mesa, the City of San Diego and Vista and shows a combined total of  $12,992,132 in 2019 cannabis tax revenue for these cities.

The EIR covers a diverse range of economic factors beyond simply tax revenue including topics such as employment and cannabis industry salaries, retail density, public health impact, enforcement costs against the illicit market and social equity issues.

A unique aspect of the San Diego economy is the profound impact of the craft beer industry. Drawing on CSUSM’s years of studying the economic impact of craft brewing and the industry’s rise, this report highlights some interesting parallels and next steps for the cannabis industry.

For questions regarding this report or help carrying out a similar analysis in your jurisdiction, please contact info@bluewaterga.com.

Tax Revenue

When a local jurisdiction is considering allowing commercial cannabis, both proponents and media sources promise practically unlimited tax-generating potential from what is widely considered to be a fast-growing multi-billion dollar industry. With public record requests from the cities of San Diego, La Mesa and Vista, we can now tell you both the overall tax revenues from medical and adult-use cannabis in these cities as well as the average revenue generated from a single dispensary.

Average Tax Revenue per Dispensary April-June 2020

Source: CSUSM. San Diego Cannabis Industry Economic Impact. January 2021. See below for full report.

 

Job Creation and Cannabis Industry Salaries

The cannabis industry has created many jobs since legalization, both full-time and part-time, and also provides the same employment opportunities as many corporations on their executive, accounting, human resources and other teams. While some industry jobs do require advanced degrees, like analytical chemist, many are entry-level jobs with ample opportunity for on-the-job training and career advancement in this still nascent industry.

In 2019, there were 39,804 full-time cannabis employees in California offering a range of salaries and hourly compensation as shown below.

Cannabis Industry Jobs & Salaries

Source: CSUSM. San Diego Cannabis Industry Economic Impact. January 2021. See below for full report.

 

Enforcement Costs

The lion’s share of enforcement costs for a local jurisdiction concerning cannabis come from enforcement costs related to shutting down illegal, unlicensed shops. Even though licensed, adult-use cannabis sales became legal on January 1, 2018, after the passage of Proposition 64 in 2016, the illicit market continues to thrive. It is estimated that more than 70% of cannabis sales in California occur in the illicit market, which not only creates enforcement costs but also cuts into the tax revenue generated by the licensed industry. While much of the focus is on the very visible unlicensed retail operations, it should be noted that unlicensed growers and manufacturers are also contributing to this problem.

For example, in 2019 the City of La Mesa shut down an illegal retail location and spent approximately 30 hours to do so including surveillance, operations, enforcement and report completion. In the City of Vista, the average cost for shutting down an unlicensed dispensary was $39,304.37.

911 Calls by Dispensaries vs Traditional Businesses

Source: San Diego Chapter of Americans for Safe Access. San Diego Dispensary Crime. 2016.

Many opponents of licensed cannabis believe that cannabis dispensaries bring crime to the neighborhoods where they are located. Multiple studies have shown that is not the case and that, in fact, these locations generate fewer police calls than other businesses thanks to state-required 24-hour video surveillance, on-site security personnel and other safety measures.

Public Health Impact

In states where cannabis has been legalized, opioid use has shown a dramatic change. In a 2018 study conducted by the University of Georgia, both prescriptions and daily doses of opioids decreased.

A Journal of the American Medical Association (JAMA) Internal Medicine peer-reviewed study on medical cannabis laws and opioid overdose mortality, researchers concluded that medical cannabis laws are associated with significantly lower state-level opioid overdoses.

Consumer Access and Retail Density

One of the most important questions for any jurisdiction when implementing commercial cannabis is the appropriate number of retail licenses for their city.

In California, the number of off-sale liquor licenses issues is limited to one for each 2,500 residents. As seen in the chart below, the current density of cannabis retail licenses in San Diego is significantly less than for the alcohol industry.

Retail Density of Cannabis Dispensaries

Source: CSUSM. San Diego Cannabis Industry Economic Impact. January 2021. See below for full report.

It should be noted that the off-sale license type for alcohol is only one type of commercial alcohol license type available and that the disparity between cannabis retail licenses allowed and alcohol is even higher when all alcohol license types are taken into consideration.

Comparison to Craft Brewery Industry

San Diego is known as the craft brewing capital of the United States. The similarities in public perception, regulations and size of the market for commercial cannabis and craft brewing are striking. Both industries were seen in a negative light by the public, so the number of licenses issued and zoning were restricted in the first years of commercial licensing.

While those restrictions have eased greatly for craft brewing, with over 220 craft breweries and tasting rooms now open in San Diego, commercial cannabis is still highly restricted.
According to the City of Vista’s website, one brewery accounts for 7,000 residents in Vista and one brewery accounts for every 19,000 residents in the City of San Diego. The retail density for the cannabis industry is twice the amount in the City of Vista and, in the City of San Diego, it is nearly five times the amount.

Retail Density of Cannabis Dispensaries

Source: CSUSM. San Diego Cannabis Industry Economic Impact. January 2021. See below for full report.

 

San Diego Cannabis Industry Economic Impact Report, January 2021

Below you will find the full text of the first annual CSU San Marcos EIR published in January 2021, as well as a printer-friendly version.

Click to View and Download Print Ready Version (PDF)

2021 San Diego Cannabis Economic Impact Report-web