-June 28,2023-
People want their entertainment. But in recent years there has been a big shift in where they get their thrills.You don’t have to travel too far to witness a two-fold transformation.
Movie theaters are going dark while the lights and customers are ‘turning on’ at more Valley cannabis stores.
Curtain coming down
In Hanford there were three movie theaters a few years back showing regularly scheduled movies. Now the curtain has come down on two of them.This month the former theater on 11th street will get planning commission approval to convert the empty building to a First Pentecostal Church. The church already owns the property. The second former movie theater on 7th -Metro 4 Cinema has been for sale for years but the 15,000sf building has no offers.They closed in 2020 at the beginning of the pandemic that devastated all movie theatres across the country
In Visalia the former Main Street theater in Downtown will be converted to a simulated golf club according to plans filed with the city. Meanwhile, the Regal Cinema at the Sequoia Mall has closed their doors recently with the parent company in bankruptcy. Court records show that Regal will no longer lease the premises leaving the middle of the mall without a use. But what? The mall developer is working on plans but has yet to announce them.
The pandemic dried up ticket sales, shuttered theaters and ruined finances that pushed Regal’s parent company Cineworld into filing for Chapter 11 protection in September 2022 owing $8.8 billion. The chain, the number-two movie theater in the US, is now set to exit bankruptcy next month.
Cineworld, had 9,139 screens at 747 locations in 10 countries but in bankruptcy court has been paring down its portfolio of leased theaters. Now that includes the Sequoia Mall site as of May 31 according to the real estate firm CoStar.The second Regal Cinema property in Downtown Visalia is for sale.
The nation’s number one chain – AMC- isn’t doing much better with news this week that its stock has plunged to $4 a share compared to $36 this time in 2021. The chain has only one location in the Valley – in Bakersfield.
Even though the pandemic has calmed, customers are turning to at-home streaming for more of their movies, even blockbusters, putting the future of movie theaters very much in doubt.
If more people are staying home for their entertainment they are more likely to be puffing on a joint and popping their popcorn in their kitchen microwave.
Cannabis stores on the rise
Central Valley cities are permitting more cannabis stores in their jurisdictions as a way to increase their tax revenues. That includes Hanford where the city is permitting construction of a third cannabis dispensary- Embarc on 7th and Harris.The chain has a store in Fresno.
The City of Hanford estimates its cannabis tax take will grow from $879 thousand in 2022/23 to $1.3 million in the 23/24 year based on three dispensaries.
Likewise in Porterville where the city council approved adding a third dispensary and inTulare where the city will now allow three retail stores with hopes that tax revenues will top $1 million this fiscal year according assistant city manager Josh McDonnell.The city is budgeting less as a conservative measure.
Woodlake expects to take in over $1 million in the new fiscal year as they count on cannabis operations that grow and manufacture pot products for more of their revenue. Lemoore, too, has permitted cultivation and retail dispensaries to grow their revenue that may reach $3 million.
In Visalia the city council is expected to take a new look at allowing cannabis stores after a recently completed survey saw strong support among the younger population to allow dispensaries. A council vote could come later this year.
The City of Farmersville has seen their expected cannabis revenue decline slightly in the past year but still around $1.3 million.The City of Lindsay with one store in town is expected to approve a second.
The state reports that cannabis sales in 2022 in Tulare County were almost $15 million while in Kings County sales were just under $8 million.
Revenue declines 25%
Despite local growth, statewide pot revenues are declining amidst an apparent glut.
The California Department of Tax and Fee Administration (CDTFA) reported cannabis revenue for the fourth quarter of 2022. As of February 16, 2023, total cannabis tax revenue from fourth-quarter returns is $248,500 million. This includes California’s cannabis excise tax, which generated $128 million; and $120 million in sales tax revenue from cannabis businesses. The total reported cannabis tax revenues do not include outstanding returns. They also do not include locally imposed taxes collected by cities and counties.
For the same period a year earlier, the state reports cannabis tax revenue at $330,500 million – a drop of around 25%.
In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act. On January 1, 2018, two new cannabis taxes went into effect: a cultivation tax on all harvested cannabis that enters the commercial market and a 15 percent cannabis excise tax upon purchasers of cannabis and cannabis products. The cultivation tax no longer applies to cannabis or cannabis products starting July 1, 2022. Since January 1, 2023, distributors (including microbusinesses that distribute cannabis) are no longer responsible for collecting and paying the cannabis excise tax to CDTFA for cannabis or cannabis products sold or transferred to cannabis retailers. Cannabis retailers must register for a cannabis retailer excise tax permit and are now responsible for reporting and paying the cannabis excise tax to CDTFA for sales transactions of cannabis and cannabis products. Since the retailers’ responsibility to report and pay the cannabis excise tax to CDTFA started January 1, 2023, their first cannabis retailer excise tax return is due by May 1, 2023.
Pot price plunges
A Forbes article notes that California pot prices are down.“Most of us farmers have been trying to tell the state [regulators] that the marketplace is imploding,” says a grower “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.”
“The wholesale price in California is currently around $665 a pound, which is down 26% year over year, according to Cantor Fitzgerald. Since 2017, the year before legal recreational sales began in the state, and through last summer, the wholesale price of cannabis in California is down over 50%, according to New Leaf Data Services, an institutional-grade wholesale price tracker.”
“All of this means that California—which only has about 1,000 legal dispensaries for its 40 million residents—grows far more cannabis than can be legally consumed within its borders. The cannabis surplus has led to a price war in the legal industry and intense competition from the illicit market.”
A Santa Barbara County, a cannabis local news report says “ Amid a glut on cannabis in California, the prices for wholesale cannabis flower have plunged by half from their peak of $1,400 in 2020 to about $660 per pound now. The state is believed to be producing three times as much pot as residents can consume — much of it grown in Santa Barbara County — effectively fueling the black market where, by most estimates, two-thirds of the sales are taking place.
Statewide, county officials said, the number of active cannabis cultivation licenses has fallen by 20 percent since early 2022, as a host of provisional licenses expired and were not renewed.”
For local cities, the news could mean pot stores here too may also wane.
captions…
Conversion of movie theaters to other uses like golf simulation happening nationwide and locally in Visalia
new Hanford cannabis operator
2
Attachments
• Scanned by Gmail