The industry has taken a turn for the better since cannabis was legalized for recreational use in Colorado. Now, for the first time in the Colorado industry, downward trend.
This is most evident when looking at tax revenues, but there are other indications. Pharmacies are closing and delivery services and social clubs are still working to find a foothold. I’m starting to worry that the cannabis boom is finally coming to an end.
“More people will be laid off.
As of July, taxes and fees collected from retail cannabis reached $198.3 million, down $53.7 million, or 21%, from 2021. Colorado hit record sales in his 2021, pharmacies hit her $2.2 billion, bringing in $423.5 million in taxes. significantly lower.
There are now concerns that if this decline continues throughout the year, it will reduce the amount of state tax money spent on things like public school funds. The industry could bring nearly his $24.9 million to the fund, compared to his $31.5 million last year. Retail sales tax allocations to local governments could also be reduced from $27.8 million to $22 million.
This goes hand in hand with the 44% decline seen in medical cannabis sales in what Truman Bardley, head of the Marijuana Industry Group’s trade organization, calls “a very big deal.”
“Any program that relies on marijuana taxes will be significantly reduced,” argues Bradley.
In addition, prices have fallen. In 2021, cannabis flowers sold for $1,300 a pound and the trims used in tinctures and oils were $425 a pound. Flowers are now selling for nearly $700 a pound, with trim down to $225 a pound, according to the latest market rates from the Colorado Department of Revenue. These are the lowest prices since 2014.
As prices have fallen and tax revenues have dwindled, supply has begun to outstrip demand, and new licenses are still being granted to cannabis businesses, though some businesses have closed.
“Time and again we have seen communities see value in a regulated market and see the cannabis industry as a potential solution to bring more income to their communities, so they eventually legalize it. “But there is a point where taxation becomes predatory and/or unsustainable. And that’s what we’re approaching…”
John Bailey, founder of the Black Cannabis Equity Initiative, believes this is an inevitable change because the industry is no longer new.
“What you’re seeing is not a decline, it’s a flattening of a saturated industry,” Bailey says. “Even in the midst of a decline, people are still buying weed. It’s marketing flattening out, and it’s flattening out for a number of reasons: the market may be saturated with so many businesses.”
Others believe the state is exploiting the local industry by overtaxing it. , these taxes are being taken away from growers and small businesses as most states have industries and less novelty.
“Ultimately, I think federal legalization is the only way to grow a stronger industry,” says Chaz Faille, sourcing manager for Denver-based Willy’s Reserve Brands. “It would help a lot if we could source the product from other states and have a distribution warehouse where that product is actually grown, instead of having a lot of states running things differently.”
It’s not yet clear how much cannabis sales will fall in Colorado, but it’s not clear if this is a sustained step for the advanced industry, or if it means bad news, but the industry and the state as a whole are on the hook. It is clear that you can feel the decline.