Faulty reasoning signals

• Confirmation Bias - 11.3% (112 hits)
• Anchoring Bias - 6.5% (64 hits)
• Availability Heuristic - 8.2% (81 hits)
• Representativeness Heuristic - 5% (50 hits)
• Hindsight Bias - 0%
• Overconfidence Bias - 2.8% (28 hits)
• Framing Effect - 5.7% (56 hits)
• Loss Aversion - 4.1% (41 hits)
• Status Quo Bias - 1.6% (16 hits)
• Sunk Cost Effect - 0%
• Optimism Bias - 0.4% (4 hits)
• Pessimism Bias - 0.9% (9 hits)

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Washington state has too much pot as recreational cannabis sales decline

Washington state has too much pot as recreational sales decline.

But industry experts say that's only one of many challenges that cannabis businesses currently face.

To put it another way, Washington’s recreational cannabis industry was blazing with sales, at first.

The business was sticky.

But these days, it’s more icky.

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Washington's pot industry bloomed shortly after voters approved recreational cannabis sales in 2012.

Sales peaked in 2021.

The industry reported revenue of about $1.4 billion in Washington that year.

But last year, sales at licensed dispensaries were down to about $1.1 billion worth of weed.

That’s a 21% drop in four years.

It’s difficult for industry experts to pinpoint a single cause for the downturn.

There are chronic issues throughout the supply chain, such as growers often ending up with too much pot.

Then there are high taxes on the legal product, and an illicit market that continues to thrive.

Washington has too much pot

Michael Dykstra, owner of Mount Baker Homegrown, a small grower based in Bellingham, said he's noticed the number of similar growers in his area dwindling.

One of the biggest issues growers face, he said, is struggling to move product.

They end up with too much pot.

“Cannabis truly degrades at least some fraction of a penny every second,” Dykstra said.

“You’re losing money every second it’s not being sold or consumed.”

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That's less of a challenge for larger operations, which likely have equipment that helps keep the product fresh, sometimes up to four months.

For smaller growers like Dykstra, the window to get quality product out the door is about eight weeks.

Farmers who end up with too much pot often end up selling cannabis wholesale, at a discounted rate.

If they can’t get rid of the product, it will spoil.

The crop is lost.

Farmers could eventually go under if the cycle continues.

“Legacy guys” who had small operations and licenses to grow for over 10 years are going out of business, Dykstra said.

Dykstra’s business is doing alright, so far, but he’s had some bad years and struggled to move product.

In December of 2024, his farm’s revenue was down by $150,000.

He managed to recover.

Anecdotally, he said, he knows other growers who used to make $500,000 a year, but their revenue has been slashed in half.

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He also noted that when farmers are experiencing dire situations, it’s easy to look for other ways to sell the product, even if they're illegal.

The illegal market is one of the largest problems for producers who follow the rules.

Thriving illegal markets and hemp

While pot shops are plentiful in many parts of the state, there are some parts of Washington where local governments have approved bans on dispensaries.

Some counties also have passed prohibitions.

Lewis County requires cannabis businesses to provide proof of approval from the Drug Enforcement Administration or U.S. attorney to operate.

Since those entities don't provide approval, such businesses aren't likely to open in areas that require it.

That means people in such areas often go through the black market, said Aaron Pickus, spokesperson for the Washington CannaBusiness Association.

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Underground business is bogarting sales.

It’s also a safety concern, as products on the black market aren't monitored for safety.

Pickus also pointed to the illegal sale of hemp as a problem, an issue few expected.

In 2018, Congress passed a farm bill that de-listed hemp as a controlled substance.

Hemp has very low levels of THC, levels that don't naturally get people high.

However, growers have found ways to derive intoxicating THC from hemp.

That led to unlicensed businesses across the country selling hemp with intoxicating levels of THC.

“I believe, because of the federal loophole, these businesses were operating in plain sight where you could buy hemp-derived THC at vape stores or gas stations,” Pickus said.

Intoxicating hemp has also been sold online, through sites that look legitimate.

It’s also an easy way for minors to access THC.

In 2023, Washington state lawmakers passed a law that banned non-cannabis retailers from selling hemp with detectable levels of THC.

Congress is currently working on a similar bill.

Pickus said it’s hard to say if the drop in revenue is due to a large portion of sales moving to the illicit market.

There is no comprehensive study looking into the size of illegal sales.

However, he said there are economic analyses that suggest only about half of cannabis sales in Washington state are through the legal marketplace.

High taxes

Washington state has a 37% excise tax on retail pot sales.

That’s the highest recreational cannabis tax in the country.

At the same time, businesses can’t get the federal tax breaks available to other industries because the drug remains illegal at the federal level.

“It makes it very challenging to have a business partner [the state government] that takes that much of a percentage from all of us,” Dykstra said.

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Pickus said he’s pushing to get state lawmakers to lower taxes on recreational cannabis.

Cannabis is more often a bi-partisan issue, he said.

But with Washington state facing major budget woes, it’s difficult to have this conversation with lawmakers.

“ We're trying to encourage those who are purchasing cannabis to do so safely,” Pickus said.

“If the tax rate, as we believe, is pushing people into the untaxed illicit marketplace, then we've got to look at the tax rate as one of the barriers to a safer choice.”