Why Was San Francisco's 420 Festival Cancelled? It Could Be a Sign of Challenges in the Cannabis Industry

Since 2016, when California voters legalized cannabis for recreational use, sales have blossomed into a multibillion-dollar industry — and the promise of this “green gold” was most apparent during the 420 Festival at San Francisco’s Golden Gate Park.

Since 2017, the annual free event has become a more expensive enterprise than the days prior when stoners informally gathered at Hippie Hill. Drum circles and hand-to-hand cannabis sales transformed into big-name concerts and flashy new cannabis brands marketing their wares from merchandise booths.

“People don’t realize there’s a lot of infrastructure that needs to happen to be compliant with all the city departments and to have legal sales and consumption,” said Alex Aquino, a longtime festival organizer. “There’s a lot of restrictions and guidelines, and it’s expensive to do that.”

Economic realities have apparently caught up with the festival. Citing a struggling cannabis industry and city budget cuts, organizers canceled this year’s celebration. Aquino said there weren’t enough sponsorship dollars to make it happen.

“It’s really up to the sponsors to come and say, ‘Hey, we have the cash and the financing to fund this event,’” he added.

According to Aquino, the 420 Festival — which has cost nearly a half-million dollars to set up — relies on sponsorships and donations. He said the event typically draws around 40,000 people, requiring security, portable toilets and permits.

The festival’s lack of sponsorship dollars this year is likely due to inflation and the high cost of borrowing money, according to David Downs, senior editor at Leafly.com and organizer of the city’s first-ever SF Weed Week, which is set to take place this year.

“Businesses are being very careful where they spend their marketing dollars. Those budgets are often the first to get cut as businesses seek profitability,” Downs said. “Hippie Hill in 2024 sailed into those headwinds.”

California Cannabis sales have been on the decline. Sales peaked in 2021 at $5.35 billion but dropped by $45 million the following year. The most recent data, showing sales through June 2023, reveals even weaker sales.

Still, Downs calls the outlook for the pot industry in California “Dickensian.”

“It’s the best of times and the worst of times; it just depends on who you’re talking to,” he said.

By all accounts, business is good at Solful, a cannabis dispensary in San Francisco’s Inner Sunset neighborhood. On a weekday afternoon, a steady stream of customers peruses colorful aisles of cannabis flower, oils and even cannabis-spiked seltzers.

“I never like to think cannabis is all doom and gloom,” said Eli Melrod, CEO and co-founder of Solful. “It’s certainly having its challenges. I think we’ve had some rainy days, but I think the future is always bright for cannabis. I mean, people will always consume weed, right?”

Melrod said the lack of sponsorship dollars for the 420 festival this year tracks with a general purse-string-tightening happening now in the industry. He said there was a “grow at all costs mindset” in the early days of legalization, but now, businesses are being more frugal.

“As capital in cannabis and just in general has gotten more expensive, the focus has shifted from growth to cash flow and profitability,” Melrod said.

He said while sales at Solful are relatively strong, he’s noticed demand going down in the industry.

“The general cost of doing business relative to a normal business is much, much higher,” Melrod said.

State laws require dispensaries to charge around a 24% tax to consumers, and with inflation stretching everyone’s wallet, he thinks that might be causing people to buy elsewhere.

“We’ve had an existing, very strong illicit market prior to legalization that really hasn’t gone anywhere. In fact, it’s probably gotten stronger,” Melrod said.

Joey Hajduk of Livermore was among the people browsing Solful’s selection of cannabis flower, oils and even hard seltzers. He said it was a “bummer” that there won’t be a 420 Festival, but he plans to mark the day anyway.

“I’ll probably just hang out with a few friends and roll up a joint and enjoy the river or something,” Hajduk said.

With the “official” 420 party canceled this year, it’s still likely that many cannabis enthusiasts will head to Hippie Hill to celebrate the holiday just as they have in past decades. (In lieu of the festival, the city plans to hold a coed kickball and volleyball tournament.)

“We anticipate there will still be a really lively vibe in the neighborhood,” Melrod said.