While history was made in Colorado in 2014 when marijuana became legal for recreational use, a new report has highlighted some of the issues facing the state’s weed market and what other states could see happen.
The report from Politico highlighted several issues that could soon hit the other 24 states that have legalized weed for recreational use.
From regulatory burdens to an oversaturated market and competition from nearby states, Colorado’s cannabis industry has been in havoc, with many in the state abandoning their businesses.
Let’s rewind the clock.
In 2021, Colorado’s cannabis market saw record sales totaling $2.2 billion, coming off a $2.19 billion year in 2020. Compared to pre-pandemic numbers, this was a massive boom, as 2019 saw $1.7 billion in sales.
Fast forward and the trend has since reversed, with 2022 only having $1.7 billion in sales and 2023 being the state’s weakest year since 2017, with only $1.5 billion being brought in.
The drop in sales has affected the state’s finances, as Colorado took in just $282 million in cannabis tax revenue in fiscal year 2023, a figure that was down more than 30% compared to 2021.
Politico reports that several problems have arisen, including an oversupply of product that has caused prices to plummet.
One report from Cannabis Benchmarks shared that wholesale cannabis prices fell nearly $1,000 from their $1,700 a pound price point over the last three years.
Other issues included the spread of cheap and unregulated hemp-derived products and federal laws that subject operators to high taxes and regulatory costs.
Now, some say that the once-great terrain of the cannabis industry has dried up.
“It’s like the wind in our cannabis sails in Colorado has just been sucked all the way out,” Wanda James, the founder of Denver dispensary Simply Pure, one of the first recreational dispensaries in the state, shared with Politico.
However, one issue remains bigger than any other for Colorado’s weed market, and that’s the increase of competition driven by the 24 other states that have started their own markets in the wake of recreational legalization.
The report says that while tourists once flocked to Colorado to purchase the products only its market could offer, experiences closer to home have kept many away, as they don’t need to cross state lines to get high.
Now, officials, like one in New York, are using Colorado’s experience as a cautionary tale to justify not oversaturating the state’s market with too many licenses at once.
Still, with more states poised to legalize the substance this election and Congress talking about federal legalization, the market could be in for even more of a shakeup, experts say.