Legislators press Department of Cannabis Control as report finds production up but industry value and revenue falling

Lawmakers held a joint informational hearing with the Department of Cannabis Control to review a department report on the condition and health of California’s cannabis industry, focusing on market trends, enforcement against illicit sellers, testing standards and the potential impact of an upcoming state excise tax increase.

The Department’s chief deputy director, Clint Kellum, and deputy director of government affairs, Christina Dempsey, outlined the state’s regulatory evolution and enforcement work. Economist Duncan McEwen of ERA Economics summarized market data, saying that licensed production moving through the regulated supply chain has risen while wholesale and retail unit prices have fallen and “the overall gross value of the industry is down.” The panel and legislators repeatedly tied those trends to competition from a persistent illicit market, enforcement capacity, and costs borne by licensed businesses.

The nut of the hearing: production and quantity processed through licensed channels are increasing, but price declines have outpaced those volume gains — shrinking tax receipts and making it harder for licensed firms to cover costs. McEwen told the committees that licensed production was about 1,400,000 pounds in 2024 and that the licensed market likely supplies roughly 38–40% of statewide consumption; illicit production remains a substantial share of total California…