California’s regulated cannabis sector posted another quarterly decline, highlighting the ongoing challenges facing the nation’s largest legal marijuana market. State figures indicate that licensed marijuana stores generated approximately $956.7 million in sales during the first three months of 2026.
That total was modestly lower than the $976.5 million recorded during the same period in 2025. It also trailed the $1.07 billion reported in the opening quarter of 2024, continuing a downward trend that has persisted for several years, according to data released by the state’s Tax and Fee Administration Department.
In many regions, businesses have managed to move higher volumes of products while earning less money due to sustained price pressure. However, state regulators noted that product movement also slipped slightly during the latest quarter, suggesting demand itself may be softening.
Data from the Department of Cannabis Control indicated that California collected roughly $248 million in marijuana-related tax revenue during the quarter.
The latest results follow a difficult year for the legal market. Licensed retailers reported about $3.9 billion in sales throughout 2025, compared with $4.2 billion the year before. Sales had already fallen to $4.4 billion in 2023, making 2025 the third straight year of contraction for the state’s cannabis industry.
Some operators linked last year’s downturn to a higher excise tax that went into effect on July 1, 2025. However, that explanation does not fully account for recent performance because the tax was eliminated by October. As a result, it cannot explain weaker sales reported in late 2025 or the decline seen at the start of 2026.
Across four major product segments, including edibles, vapes, infused pre-rolls, and packaged flower eighths, retailers sold more than 36.3 million units during the quarter. That figure was slightly lower than the nearly 36.9 million units sold during the same period a year earlier.
Vape products generated approximately $350.8 million, outperforming flower, which brought in about $312.8 million. The category has now maintained its lead over flower for nearly a year. Pre-roll products ranked third, producing roughly $184.5 million in revenue.
California’s market performance contrasts with broader national trends. According to Headset, pre-roll sales reached $3.6 billion in 2025, up nearly 10% from the previous year, while unit sales increased by almost 20%.
Meanwhile, legal operators in California continue to compete with an extensive illicit market. Authorities recorded increased seizures of illegal cannabis operations last year, a sign that demand remains strong for lower-priced products sold outside the state’s licensed retail system. State regulators have described the industry as a market undergoing a lengthy transition from decades of illegal activity into a fully regulated commercial environment.
The declining marijuana sales numbers in California are likely to be of concern to the entire marijuana industry, including operators like Curaleaf Holdings Inc. (CSE: CURA) (OTCQX: CURLF) that operate in multiple states across the country.
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