California Cannabis Sales Declined in 2022

Finalized data from the California Department of Tax and Fee Administration shows that California cannabis sales declined in 2022. The decrease in sales is the first dip since adult-use sales began in 2018.

In 2021, the state collected $5.77 billion in adult-use cannabis sales, but 2022 numbers reflect only $5.3 billion for the past year—an $8.2% decrease. According to coverage by Forbes, many believe that expensive taxes and not enough dispensaries have contributed to this decline.

Cannabis cultivators in California have been trying to tell legislators about the issue. “Most of us farmers have been trying to tell the state [regulators] that the marketplace is imploding,” Johnny Casali, founder of Huckleberry Hill Farms, told Forbes. “The drop in retail sales means the customer is tired of paying the exorbitant taxes and are now buying it from a friend of a friend or the guy on the corner.” Casali explained how all of his product was sold in 2022, but he still experienced a loss of $50,000.

This loss is likely due to the decreased price per pound of cannabis statewide. American financial services firm Cantor Fitzgerald cites the wholesale price of cannabis at $665 a pound, which is a 26% decrease year over year. According to New Leaf Data Services, wholesale cannabis prices have dropped more than 50% between 2017 and 2022.

California has more than 800 licensed cannabis dispensaries, and cultivators grow more than can be purchased. Casali hopes that the situation will improve. “We are already getting orders for this season,” Casali said. “But without federal legalization, I don’t know how we fix our supply-and-demand problem.”

Cantor Fitzgerald analyst Pablo Zuanic states that there was a boost in California revenue gain due to increased sales during the pandemic, between 2020-2021. Zuanic believes that a return to more normal sales, on top of current inflation, is also contributing to the sales decline. He did state his belief that 2023 will be a year that California’s cannabis industry will bounce back though, comparing the 8% decrease in 2022 with the 68% increase in 2020.

Glass House Brands founder Graham Farrar told Forbes that he believes that Californians didn’t smoke less in 2022, but that the black market is just outselling legal flower. “Nobody prefers bathtub gin, right? You only drink bathtub gin if legal gin costs twice as much,” Farrar said. “If we could bring taxes on the consumer down, I think you’ll see more people in the legal market. And I think you’d actually collect more tax revenue.”

The overall decline of cannabis sales in general has pushed some cannabis brands to leave California. Garcia Hand Picked recently announced its departure from California. “We’re taking a pause in California,” said the brand’s parent company, Holistic Industries. “We want to ensure CA consumers have the highest quality flower for the long term, so we are in the process of choosing a new local partner for cultivation, production, sales, and distribution of Garcia Hand Picked in CA.”

Some regions are trying to help cannabis cultivators, such as Sonoma County, which recently eased tax burdens for some growers based on their operating size. Most recently, a California grant of $20 million has been earmarked to “provide local jurisdictions with resources to expand access to regulated cannabis products to underserved areas.”

In mid-February, the last Californian federal prisoner who was imprisoned for cannabis was finally released. After spending 15 years in prison, Luke Scarmazzo was released with the help of The Weldon Project. “The feeling is surreal. We’ve worked toward this day for so long,” Scarmazzo wrote on Facebook. “This was a huge victory for my family, friends, community and the entire cannabis movement. I’ll take a moment to enjoy this, but make no mistake, there’s still much work to be done—my people need to be free—and that hard work begins now.”

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California Cannabis Prisoner Luke Scarmazzo Released from Federal Prison

California cannabis prisoner Luke Scarmazzo was freed from prison on Feb. 3, with help from Mission Green, a campaign led by The Weldon Project. “Today, after serving nearly 15 years in prison for operating a cannabis dispensary, I was granted my freedom,” Scarmazzo wrote on his Facebook page. “The feeling is surreal. We’ve worked toward this day for so long. This was a huge victory for my family, friends, community and the entire cannabis movement. I’ll take a moment to enjoy this, but make no mistake, there’s still much work to be done—my people need to be free—and that hard work begins now.”

Scarmazzo owned a Modesto-based dispensary, called the California Healthcare Collective (CHC), with Ricardo Montes in 2004. In September 2006, the Drug Enforcement Administration (DEA) raided CHC and Scarmazzo and Montes, who were 26 at the time, were found guilty in 2008. Ultimately Scarmazzo was sentenced to 21 years and 10 months, and Montes was sentenced to 20 years. Montes was later pardoned by former President Barack Obama in 2017, but Scarmazzo remained in prison.

Scarmazzo petitioned for release in January 2021, but was denied. On Facebook, he shared the details of his life in prison after the denial. “I have been in this quarantine unit in a federal penitentiary at Yazoo City, Mississippi for 91 days. When I arrived here prison officials lied and told me I’d only be here the standard 14 days. This, despite me being ‘COVID recovered’ in September 2020, with at least a temporary acquired natural immunity,” Scarmazzo wrote. “I’m locked into my cell 24 hours a day, 7 days a week. Out of 168 hour week, I’m allowed out of my cell for 3 hours to take a shower and use the phone; the other 165 I’m in a concrete box. I haven’t felt the warm sun or inhaled a breath of fresh air in over 3 months. I’m fed enough to be kept alive and confined in frigid temperatures. And these are just a few of the blatant constitutional and human rights violations that I endure daily without just cause.”

During his sentence, Scarmazzo met Weldon Angelos, an inmate who was sentenced to 55 years in prison for a cannabis conviction. The two spent seven years in prison together, but eventually in 2016 Angelos was released after having served for 13 years, and received a full pardoned in December 2020. After being released, Angelos founded The Weldon Project and has continued to advocate for the release of other prisoners who are still serving time for cannabis convictions.

Courtesy of Instagram: Luke Scarmazzo and Weldon Angelos

“Happy to announce that Luke is being released today! The judge granted compassionate release based on policy changes at the federal!” Angelos shared on Twitter the day that Scarmazzo was released.

Judge Dale Drozd issued a compassionate release order based on his case. “Defendant Scarmazzo is certainly correct when he argues that there have been ‘dramatic changes in the legal landscape concerning the sale and use of marijuana’ over the 15 years since he was sentenced, including ‘changes in [state] marijuana laws, Congress’s perspective, public sentiment, the Justice Department’s enforcement policies, and…case law.’ This is particularly true in California where [the] defendant was operating his marijuana dispensary,” Drozd wrote. “While federal law remains unchanged—still making the possession, cultivation and distribution of marijuana unlawful and subject to criminal penalties—federal prosecutions for marijuana-related offenses have been curbed significantly, particularly in states like California that have legalized those activities with some restrictions. In the undersigned’s experience, for the most part federal prosecution of marijuana offenses in California is now limited to those offenders engaged in large, unauthorized cultivation sites located on federal lands.”

Like Angelos, Scarmazzo has pledged to help others like himself be freed from prison for cannabis convictions. In October 2022, the U.S. Sentencing Commission estimated that more than 6,577 people who receive pardons from the Biden administration after President Joe Biden announced pardons for simple cannabis possession. California Gov. Gavin Newsom announced 10 pardons in December 2022, with at least two of those prisoners having cannabis convictions. Pennsylvania Gov. Tom Wolf also recently pardoned 2,500 people in January 2023, 400 of which were convicted of nonviolent cannabis offenses.

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Cannabis Prisoner Luke Scarmazzo Released

A California man who spent nearly 15 years in federal custody for operating a state-legal medical marijuana dispensary was released from prison last week following a years-long campaign by family and restorative justice advocates to secure his freedom. Luke Scarmazzo, who was dubbed California’s last cannabis prisoner by marijuana policy reform advocacy group CalNORML, was freed from federal custody on Feb. 3 in response to a compassionate release petition filed on his behalf in 2019.

In 2006, the Drug Enforcement Administration raided the medical dispensary Scarmazzo and his business partner Ricardo Montes were operating in compliance with Proposition 215, the 1996 ballot measure that legalized the medicinal use of cannabis in California. In May 2008, they were convicted for operating a continuing criminal enterprise. Scarmazzo was sentenced to 21 years and 10 months behind bars, while Montes received a 20-year sentence. On Jan. 5, 2011, a federal appeals court upheld the convictions of Scarmazzo and Montes, denying them a new trial.

“We followed California law to the letter,” Scarmazzo said about their convictions. “We paid our taxes. We went to work every day providing a benefit and service to the community. Yet in the end, we were made out to look like common criminals.”

In May 2017, Montes was granted clemency by President Barack Obama, but for some unknown reason, Scarmazzo was left in prison. He was disappointed once again when President Donald Trump left office in January 2019 without granting Scarmazzo a pardon as many advocates expected him to do.

Luke Scarmazzo with his daughter. PHOTO Courtesy of Change.org

Clemency Campaign Secures Scarmazzo’s Release

Scarmazzo’s case has received considerable attention and many criminal justice advocates including Weldon Angelos, a former cannabis prisoner who was pardoned by Trump in 2020, had taken up the cause for clemency. The two had served at the same federal prison in Lompoc, California from 2010 until Angelos’ release, where he had helped write the clemency petitions for Scarmazzo and Montes. After Obama commuted Angelos’ sentence, the former prisoner continued the fight to secure Scarmazzo’s release through his nonprofit group The Weldon Project.

“Luke’s story is one of the most tragic stories perpetrated by our criminal justice system. He was following state law but treated as a drug kingpin by the federal system. But I’m finally relieved that he can go home to his family and have a chance at rebuilding his life after serving 14 years in prison,” Angelos said. “We’ve helped a lot of people, but this one is different. Luke is my friend and someone I’ve been fighting for since we were in prison together seven years ago. Now, Luke has the ability to join us in this fight to free those we have both left behind.”

Judge Weighs ‘Unique Confluence’ of Circumstances

In his order releasing Scarmazzo last week, United States District Judge Dale A. Drozd wrote that he had considered a “unique confluence” of circumstances before reaching his decision. The judge cited Scarmazzo’s good behavior while behind bars; his pursuit of educational opportunities; strong support from his family and the community, including job offers; and noted the disparity between the sentences served by Scarmazzo and Montes, among other factors.

“The court is persuaded that the granting of the requested relief is appropriate at this point and is supported by both extraordinary and compelling circumstances and consideration of the sentencing factors set forth” by federal law, the judge wrote.

The campaign to free Scarmazzo was also spearheaded by the Last Prisoner Project (LPP), a nonprofit dedicated to securing the release of all cannabis prisoners. Kyle Kazan, an LPP board member and the CEO of California cannabis company Glass House Group, said that his company has pledged support for Scarmazzo to help ease the transition following his release. He also said the company would continue to advocate for a full pardon for Scarmazzo and called on President Joseph Biden to end the incarceration of all cannabis prisoners nationwide.

“While I think the release is an excellent sign that some judges understand how unjust the dichotomy in the law is, Luke needed a lawyer to make the argument on his behalf,” Kazan wrote in an email to Cannabis Now. “It would be a lot easier and represent the will of the majority of the American people for President Biden to live up to his promise and simply end the War on Cannabis. It would not require him to do any prisoner swaps but to simply sign 2,700 pardons. And Congress is derelict in their collective duty to continue to allow people to be sentenced to federal prison for this plant.”

Only days after his release, Scarmazzo also pledged to fight for those still serving time for cannabis-related convictions.

“After serving nearly 15 years in prison for operating a cannabis dispensary, I was granted my freedom. The feeling is surreal. We’ve worked toward this day for so long,” Scarmazzo wrote in a statement from LPP. “This was a huge victory for my family, friends, community and the entire cannabis movement. I’ll take a moment to enjoy this, but make no mistake, there’s still much work to be done—my people need to be free—and that hard work begins now.”

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Most Affected: Luke Scarmazzo, Legal Dispensary Owner

Luke Scarmazzo was a legal dispensary owner, but he still ended up in prison.

Today, the American public stands nearly in unison on medical cannabis legalization, with Pew reporting that 91 percent of Americans support reform. When introducing her federal legalization bill in November 2021, Congresswoman Nancy Mace called the issue one “a supermajority of Americans support.” 

That wasn’t the case when Luke Scarmazzo was arrested in 2006 and sentenced to 21.8 years in federal prison with a 20-year mandatory minimum. The public-at-large had not embraced medical pot like it does today. Nor had lawmakers made steps to protect state-legal ventures through directives like the 2013 Cole Memo. 

As such, Scarmazzo, a self-described God- and sports-loving young man from the blue-collar town of Modesto, California, found himself, along with friend and co-founder Ricardo Montes, as two of the most prominent examples of the ongoing War on Drugs. 

His crime? Co-owning a state-approved medical cannabis dispensary. 

Courtesy of Instagram: Luke Scarmazzo and Weldon Angelos

In September 2004, Scarmazzo and Montes legally opened California Healthcare Collective (CHC) in Modesto. The decision was born out of a lifetime of being taught about the plant’s healing potential. California’s Proposition 215 and local necessity cemented the decision. 

Scarmazzo reported that Modesto-area patients had to drive an hour and a half each way to the Bay Area to find “the nearest dispensary they could find to get the medication their doctor recommended.” With CHC, the co-owners hoped to provide a solution for the entire Central Valley, including Sacramento, the state capital.

CHC took off on its third day, thanks to a report from the Modesto Bee. “The next day, we came to work, the parking lot was full,” he recalled, estimating that 100 people were in line at the time of the store’s opening.  

The success continued for weeks afterward. Patient count and revenues were often on the rise for roughly two months. Then, a city regulation change barred new dispensaries from opening. A grandfather clause allowed CHC to stay open and now operate without any threat of future local competition. 

“Instead of getting rid of us, they ended up creating a monopoly,” Scarmazzo said.

The city inadvertently fueled the dispensary’s success. Instead of changing course, the surrounding towns did the same–further emboldening the dispensary and its owners. That’s when Scarmazzo said the city contacted federal agents, leading to an investigation of store activity, raids and the eventual arrest of the co-owners and six others in September 2006.

Two years after opening, CHC was shuttered. Scarmazzo was charged with 18 counts around conducting a criminal enterprise, conspiracy, manufacturing, distributing and possessing cannabis. 

Despite being protected in California, the co-owners “always knew we were taking a risk federally,” said Scarmazzo, adding, “Back then was a way different time than it is now.”

Only a few dispensaries dared open while federal government threats lingered overhead. Still, CHC felt that what they were doing was right and just. The thought process was formed on a costly incorrect assumption, with Scarmazzo believing that operating a legal dispensary would land them a few years in prison, at most. Shock set in when they found out that the charges for operating an enterprise carried a mandatory 20-year minimum sentence. 

“To hear those kinds of numbers, we couldn’t really fathom it,” he recalled. 

In court documents, the Assistant United States Attorney (AUSA) states that Scarmazzo was offered a 10-year sentence as part of a plea deal that would see the enterprise charge dropped, but they refused the deal. In a follow-up response via the federal prison email system CorrLinks, the co-founders couldn’t accept the law and its assertion that dispensing medical cannabis was wrong. They also believed it was possible to assemble a jury with at least half that voted for medical cannabis legalization. 

“Obviously this was another miscalculation but we made the decision we thought best at the time,” he said. 

More shock came during Scarmazzo’s trial. “We couldn’t say the words’ California law,’ ‘medical marijuana’—we couldn’t argue that cannabis has medical efficacy,” he stated. The next surprise came when prosecutors used his art against him. 

The AUSA submitted an August 2006 rap video made by Luke as evidence. Prosecution played the track in court, highlighting lyrics that touted Scarmazzo as a “businessman” and saying “Fuck the Feds.” Scarmazzo contends that he said “Fuck the Feds” concerning regulators’ refusal to reform cannabis laws, not regarding the operation of an illegal enterprise. 

In the end, Scarmazzo was found guilty and sentenced to 21.8 years in federal prison. Several rounds of appeals have been denied, including a petition for a new trial after two jurors filed verdict recantations with the U.S. District Court in Fresno. 

Scarmazzo
Courtesy of Instagram: Luke Scarmazzo and his daughter

Fighting for Freedom Continues

A 2014 Obama admin clemency initiative had Scarmazzo, then housed at a medium-security prison in Mendota, California, working with Weldon Angelos, a fellow inmate serving a 55-year mandatory minimum sentence for a nonviolent cannabis charge. Angelos had extensive experience with clemency petitions after his case garnered widespread support among advocates. 

The two began working on filings for themselves, Montes and any other inmates fitting the Obama administration’s criteria. Additional services included connecting inmates with lawyers and advocates. The effort became a clemency clinic. 

Angelos is now the president and co-founder of The Weldon Project, acting as a leading advocate for nonviolent drug offenses. He continues to fight for Scarmazzo’s compassionate release after his release in May 2016 after receiving a sentence reduction. 

“I figured Luke would beat me to the door,” said Angelos.  

He recalls the two walking the track during his final days in prison, laying out the next steps to ensure that Montes and Scarmazzo would follow him out the door soon enough. Angelos tapped into his influential network of celebrities and bipartisan politicians who helped him receive early release. 

The CHC founders had the support of influential politicians, Angelos stated. The momentum gained, but a choice by prosecutors altered the paths of Montes and Scarmazzo. Like Angelos, prosecutors opted to allow Montes’ petition to continue onward. With Scarmazzo, they fought back, with it believed that his rap video played a significant part in the decision. 

“It’s obviously the video,” Angelos stated as the rationale, adding that other reasons are out there, but none he’s heard have been justifiable. Whatever the case may be, Montes was released in January 2017. 

Pained for his own result but happy to see his friends released, Scarmazzo pushed on with petitions. He also got his story told in print and digital media, helping spread awareness for him and other offenders. Angelos was invited to the White House to meet with the Trump administration. He used his time to lobby for Scarmazzo’s release and those with similar nonviolent drug sentences. 

In January 2020, the final days of the Trump presidency saw renewed hope for Scarmazzo with a wave of influential figures including former Governor Gary Johsnon, hip-hop star Drake and NBA legend Kevin Garnett among the group signing onto Angelos’ Mission [Green] initiative. His Presidential clemency seemed confirmed on January 19, 2021, the day before Joe Biden would be sworn in as president. 

Officials told Luke and his family to prepare for his release and flight back to Modesto. The family bought a plane ticket and Luke had his bags packed. At the same time, Angelos was all but assured that Scarmazzo would be on the President’s final list of those granted executive clemency. As such, he moved to advocate for others to gain their freedom. Unfortunately, Angelos reports that pushback within the Department of Justice led Scarmazzo and dozens of others like him to be excluded from the final order. 

As the hours passed, Scarmazzo’s mind raced, unaware of the decision made in Washington, D.C. He thought of every possible reason why he was still in prison, citing every option from the pandemic to slow prison staff as the cause. Then, reality set in. 

“When I saw Biden getting inaugurated, I knew that it wasn’t going to happen,” he recalled. 

The result left Scarmazzo wondering how it happened. How did he get to the literal door before being rejected once again? In time, the pain turned to acceptance before turning into fuel. Hope remains in several forms. A compassionate release case has been in the works for years, citing changing legal circumstances around cannabis as the primary factor. 

“He couldn’t even be prosecuted today,” said Angelos, highlighting the protections legal shops now have from federal regulators. 

Scarmazzo
Courtesy of Instagram: Luke Scarmazzo in prison

Not Giving Up the Fight

Angelos and other compassionate release advocates continue to meet with the Biden administration in hopes of seeing sweeping reform. While waiting for more developments, Scarmazzo remains upbeat, finding the positive in his situation. 

“If me being in here helps some other guys get out, I’m with it,” he said, noting the importance of sharing his story and those like him. 

Scarmazzo added, “If I gotta fight a little bit longer, then I gotta fight a little bit longer.” 

Today, the 41-year-old Scarmazzo sits across the country from his family in Yazoo City, Mississippi, only seeing them once in a handful of years. Unless granted an early release, he will be out of prison in March 2027. He continues to speak with Montes and doesn’t try to overthink about post-prison life while inside. 

One thing is clear: Scarmazzo is committed to following in the path of people like Angelos and other nonviolent cannabis prisoners turned advocates. Determined to do the work until “every last one is out,” he urges the public to consider the people in prison. Describing victims of the drug war as everyday people, Scarmazzo said, “They’re your neighbors, they work at the mechanic shop, they’re the people you played sports with.”

He added, “These are regular American people that have to go through this.” 

At the same time, Angelos calls for additional support from the cannabis industry. He noted the similarities in the circumstances between themselves and Scarmazzo. 

“There should be more outrage about Luke’s case because these individuals, everybody, right now that’s in the cannabis industry, are openly violating federal law,” Angelos stated. 

Scarmazzo
Courtesy of Instagram: Luke Scarmazzo in prison

While advocating for more support, Angelos points towards recent comments from Press Secretary Jen Psaki on April 20, 2021, regarding nonviolent marijuana sentences, citing Scarmazzo’s case specifically. Psaki’s response included a reiteration of President Biden’s support for medical cannabis, decriminalization and automatic expungement.

The Press Secretary added, “It sounds like it’s applicable in this, or would have been applicable in this case,” adding that she couldn’t comment on individual matters. 

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