Report on cannabis revenue shows declining demand for leafy greens

An update on Farmersville’s cannabis tax reveals a slow decline in demand for cannabis products as more businesses continue to sprout

FARMERSVILLE – Measure Q, otherwise known as the cannabis sales tax in Farmersville, is currently in its second year of harvesting revenue for the city. And as of late city administration  is realizing they may have to tamp down their expectations on the amount of green it can bring in.

From a staff report presented to Farmerville City Council on Monday, Oct. 10, the city’s 2021-2022 budget – that ended on June 30, 2022 – anticipated bringing in $1,450,000. But by the end of the fiscal year the city received 91% of their projection totaling $1,312,323. 

Although it is not cause for immediate concern, the $137,677 shortfall has changed the city’s expectation on what Measure Q can yield. As a result the city is anticipating $1.2 million in tax revenue from cannabis by the end of the 2022-2023 fiscal year. 

The report was presented by the city’s director of finance and administration Steve Huntley, who said the observable decrease can be attributed to the statewide market saturation of cannabis, where the demand for cannabis products just isn’t keeping up with supply.

“There’s more businesses entering and providing supply into the industry than demand,” Huntley said. “So the demand could be growing, but not as fast as the supply.”

This could create a potential conflict with council’s approval of a third dispensary in Farmersville, which when completed and open for operation, could have an impact on the market, according to Huntley. The decline in revenue for the cannabis tax can also be attributed to the state-mandated delivery of cannabis to an individual’s home regardless if a city allows dispensaries in their town, as well as ever-prevalent black market operations selling marijuana illegally.

Also according to Huntley, once the phase of market saturation is completed, the phase that is likely to come after is consolidation, where two or more companies merge together and become one. This could eventually result in larger, more successful cannabis companies buying out the smaller ones to keep up with the market. Huntley said the process is much like cutting a pie into smaller and smaller pieces.

“What that will equate for Farmersville, specifically, is that there’s going to be dispensaries that will just start earning less money,” Huntley said. “The more slices of the pie there are, the smaller there’ll be, but if you can buy other people’s slices, then yours gets larger.”

Over the last year, Measure Q funds were spread across several departments. A large portion of expenses went towards Farmersville’s Armstrong Park, which turned into a larger project than the city anticipated with updates to the park’s field, bathrooms, sidewalks, playgrounds, parking lot and more. 

Funds were also distributed into providing more equipment for public servants like first responders, firefighters and police. Additional costs included the hiring of temporary employees in the city’s public works department as well as covering the costs of running cannabis-related operations.

According to the staff report, income from Measure Q is tracked separately from other discretionary revenue sources and works much like a city’s general fund. It is usually saved for one-time expenses that go towards capital improvement projects, otherwise known as property changes or restorations, in the city of Farmersvillle.

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