DENVER — We can't tell for sure if people in Colorado are smoking less weed. What we do know is they're just not buying as much of it legally. While marijuana sales are slumping, there’s a realization that inflation and increased regulations are pushing people away from dispensaries.
"One concern is that as the cost of doing legitimate business goes up, there’s always the risk of the illicit market coming back," said Truman Bradley, the executive director of the Marijuana Industry Group in Colorado.
This year, not even 4/20 -- the holiday celebrating cannabis -- could prop up the industry.
In April 2023, people bought $131 million worth of weed. That’s down from $153 million from April of the year before. Sales haven’t been this low to celebrate 4/20 since 2018.
"There’s no real indication that people are consuming less cannabis, but they definitely are spending their dollars elsewhere outside of the legal market," said Aaron Smith, the head of the National Cannabis Industry Association based in Denver.
Smith said people aren’t necessarily buying less weed. They’re just buying less weed legally. Inflation and new taxes tacked on at the dispensary may actually help your college roommate’s cousin who sells weed for half the price out of the back of his car.
"I think inflationary pressure is pushing more and more consumers away from the taxed and regulated market and into that illegal and underground market," said Smith.
Just this month, Colorado’s Marijuana Enforcement Division increased application and licensing fees for cannabis businesses.
"The Marijuana Enforcement Division has increased application and licensing fees as of July 1, 2023, due in part to a long history of reduced licensing fees and significant change in the marijuana enforcement landscape, as well as diminishing fund balance in the Marijuana Cash Fund for the implementation of the regulated marijuana program and as a result of global inflation," a statement from the Colorado Department of Revenue read.
"For context, the MED is funded by fees and fines, and per the Marijuana Code, the fees must reflect the MED’s direct and indirect costs of implementing the regulated program. In 2016, the MED reduced application and license fees by 22% in order to provide temporary relief to licensees at a time when the revenues from fees and fines exceeded projections. Those fees remained reduced until 2021, when they were then returned to their original pre-2016 levels. As of the end of the 2023 fiscal year, the cash fund that funds the MED was at a negative balance."
This is really the first prolonged downturn that we’ve ever seen in Colorado’s marijuana industry because it’s so new. Sales last year dropped $460 million compared to the previous year, according to the Marijuana Industry Group. That’s a loss of $100 million for the state in tax revenue that usually goes toward things like rebuilding schools.
"The Colorado marijuana industry in some ways is a victim of our own success. As other states have come online, we’ve seen our tourism dollars drop quite a bit," said Bradley.
The industry groups want Colorado to go all in on things like marijuana hospitality. Things like allowing smoking in certain bars or marijuana friendly events. They say that would put Colorado back on the high.
"The shine on Colorado cannabis is definitely off," said Bradley. "We can become a leader again but we need to embrace new license types like hospitality."
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