Marijuana leaf in a cart. US dollars and credit card.
Colorado’s marijuana industry broke new sales and tax records in 2021. 2022 has been decidedly different. For the first three months of the year, sales are off quite a bit. Indeed, they are off to the tune of 13% from the same time in 2021. That’s quite a lot. So what’s going on?
You would expect to see some sales fluctuations from year to year. This is normal. However, a 13% year-on-year decline represents something more serious than general fluctuation. Furthermore, seeing sales steadily decline for three months in a row signals there something going on.
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Sales Are Still Strong
Despite the year-on-year decrease, cannabis sales in Colorado are still very strong. Through the first three months of 2022, the combined recreational and medical markets have generated roughly $296 million in sales. According to numbers from the Colorado Department of Revenue, marijuana sales have generated $12.5 billion in retail revenue since 2014.
All those sales equate to tens of millions of dollars in tax revenues every year. Just in March 2022 alone, the state collected $27.8 million in marijuana taxes and fees. So yes, the market is still strong in Colorado. Yet that does not explain the 13% year-on-year decline.
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COVID-19’s Influence
Any type of economic data from 2020 and 2021 has to be analyzed in light of COVID-19. The pandemic literally changed nearly every aspect of daily life. It certainly influenced how much time people spend at home. It also changed the way adults choose to recreate. In Colorado, state residents appeared to choose more cannabis.
Is it reasonable to say that 2021 was a record year for cannabis in Colorado due to the pandemic? Probably. People spending more time at home and with not enough to keep them busy were probably more likely to look for new recreational outlets. Cannabis consumption is a reasonable option for people who have used it in the past.
Turning the calendar to 2022 represented a new beginning for a lot of people. As a nation, we are over COVID-19. We are ready to put it behind us and get back to normal life. That being the case, people getting out of the house more – especially those going back to work in the office – could lead to an organic decline in cannabis consumption just because individuals have other things to do.
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Rules and Neighboring States
It could be that some of Colorado’s cannabis decline has to do with rule changes in other states. Take Utah, for example. During the first year or so of Utah’s medical cannabis program, the rules allowed residents in rural parts of the state to purchase cannabis in neighboring states and bring it across the border. They still had to have valid medical cannabis cards, but they didn’t have to buy cannabis within state borders.
That has since changed. In fact, it changed in 2021. Utah medical cannabis patients now have to purchase all the cannabis they consume in the state from a Utah-licensed medical cannabis pharmacy. In addition, Salt Lake City’s Beehive Farmacy says the state’s emerging delivery industry is starting to expand beyond metropolitan areas. Rural patients can now get home delivery in some cases.
There can be any number of reasons explaining the year-on-year decline in Colorado’s cannabis sales. The two mentioned in this post by no means constitute an exhaustive list. At any rate, there doesn’t seem to be any need to panic if you are a grower, processor, or retailer in Colorado. What you are seeing now might simply be a natural market correction after an unusually robust 2021.
