Why Colorado’s Cannabis Sales Plateaued Last Month
After years of 100 and 50 percent growth, Colorado’s marijuana market is slowing down. Industry experts explain why.
Medical and recreational marijuana sales in Colorado went down between March and April of this year. The margin of growth between April 2017 and 2018 were minimal. According to recent figures, all signs indicate that Colorado’s cannabis sales plateaued last month. After years of unprecedented growth, here’s why legal weed in Colorado won’t be booming the way it used to.
Colorado’s Cannabis Industry by the Numbers
In February of 2015, a year after legalization, the recreational marijuana market in Colorado grew by 152 percent. By comparison, this February, it expanded 33 percent. This is an impressive figure by most industry standards, but highlights that cannabis is no different than any other industry: It cannot maintain astronomical growth.
Sales have continued to dip into 2018. According to the Colorado Department of Revenue, retail marijuana sales went from $105,945,278 in March to $97,290,806 in April. This trend extended to medical marijuana, which has been stagnating for years. Medical sales fell from $29,238,678 to $27,019,073.
Colorado marijuana sales in 2017 hit an unprecedented $1.51 billion. Some foreshadowed similar growth in 2018, which, so far, has not been the case. Legal weed grew by 31 percent in 2016, compared to 27 percent in 2017.
Most Towns Have Legalized Marijuana
When Colorado first legalized weed, only 25 towns and cities legalized the sale of marijuana. As of the start of 2018, this number had risen to 70 according to local news.
Additionally, per the Department of Revenue, the number of dispensaries has gone from 147 in 2014 to 533 in June 2018. In the same time frame, the number of marijuana cultivators has increased from 192 to 744.
“It’s market maturation, more than anything,” explained Eli McVey, marijuana industry analyst from Marijuana Business Daily to Green Rush Daily. “You’ve got 520 some odd rec stores, so not much more room for the industry to expand with the state.”
Thus, the price of weed has gone from a little over $2,000 a pound in 2015 to $1,012 in April 2018.
Coloradans Are Buying Legal Weed
Appropriately, the black market for marijuana has been shrinking since legalization. In the summer of 2017, Westworld estimated that 27 percent of marijuana purchases were illegal.
Though this seems high considering that Colorado is the poster child for legalization, compare it to 49 percent illegal sales in Oregon, 51 percent in Washington and 100 percent in places without legal marijuana.
Colorado has put time and resources into squashing the black market. In El Paso County alone, the sheriff’s office has raided 64 illegal grow operations. Until recently, a loophole allowed people to grow up to 99 marijuana plants for ‘medical’ reasons.
Medical Marijuana Sales Are Dipping
One of the ways that recreational cannabis has expanded was by acquiring customers who would otherwise buy medical marijuana. Associate Director of Analysts for the Marijuana Policy Project, Cacey Morrison, related, “We think that that’s in part due to the cost of becoming a patient and retail prices on the recreational side have come down.”
However, there is a lot of room for growth in terms of medical marijuana. Morrison added, “There’s the introduction of the pharma industry on the horizon.”
More States Have Legalized Marijuana
In 2014, Colorado and Washingon were the only two states with legal marijuana. This meant that people from all over the nation, and the world, were traveling to get a taste of that famous Colorado kush.
But since then, neighboring states Oregon, California and Nevada have legalized recreational marijuana. Vermont, Massachusetts, Maine, Alaska and D.C. have also legalized recreational cannabis, in some form. Though Colorado still has access to some of the best herb in the country, cannabis tourism is slowing.
The Market Isn’t Saturated Yet
Though Colorado’s marijuana market growth won’t ever be what it was in 2014, there is still some room for expansion. “There is room for product form evolution and innovation in the state, and room for some of the bans to be lifted,” Morrison explained. This could mean the expansion of cannabis pharmaceuticals and innovation of new cannabis products.
Plus, March and April sales shouldn’t be taken at face value. “March sales are always high,” McVey added. Since February is a short month, and the weather typically changes in Colorado in March, it’s one of the best times of year for marijuana sales.
Though market growth will eventually slow to the single digits, Coloradans shouldn’t panic. Weed is merely becoming a cyclical industry like any other.