In what industry experts are calling a perfect storm of impacts, Coloradans are purchasing less marijuana this year — considerably less — and government programs that rely on cannabis sales for revenue, including for affordable housing, metal health and homeless services, stand to be impacted.
The Colorado Department of Revenue, which tracks industry sales, issued a monthly report last week showing statewide combined sales of medical and recreational marijuana had fallen by $53 million for the month of April compared to April 2021, down 26%. Medical marijuana sales saw the biggest percentage hit, down 46% year-over-year, but recreational sales were down, as well, by 21%.
Truman Bradley, executive director of Wheat Ridge-based Marijuana Industry Group, pointed to excessive taxation and regulation on the industry as inhibiting factors, but added that cannabis consumers are also reacting to rapid inflation, including costs for basics that take priority over recreational drugs.
“There’s a point at which they’re not willing to pay,” Bradley said. “People have less money after paying for gas and groceries. There’s not as much left.”
Those priorities are confirmed by what MIG’s retailers are reporting in recent sales — seeing similar foot traffic, but a sharp drop in revenue per customer, Bradley said.
Industry specialists also blame House Bill 21-1317, passed into law last year, for the sharp reduction in medical sales. The bill added restrictions to purchasers’ abilities to gain a card for medical purchases, ones that Bradley says are often for more potent forms of cannabis.
The decline began in mid-2021, according to data provided by the Department of Revenue. Combined state sales tax revenues, which had exceeded a million dollars per month from May 2020 to June 2021, dropped from $1,214,312 in September to $822,475 in October. Revenues since have never exceeded $887,000 a month and were $776,534 this past May.
Bradley said COVID has also played a role in the rise and decline. Revenues jumped in May 2020 after shutdowns began restricting Coloradans to their homes and appear to have declined as restrictions were lifted.
“We’re also victims of our own success,” Bradley added.
Colorado sees fewer marijuana tourism dollars as more states legalize pot sales. A bumper Colorado crop last year arrived on the market at the exact moment that other factors began restricting the market.
Meanwhile, industry representatives warn about the market effects of increased taxes and are sounding the alarm on a possible ballot initiative that would raise the retail tax by 4.5%, which Bradley calculates would put Denver at over 30% in tax for a cannabis purchase. Denver, where Bradley calculates sales were off by $100 million last year, earmarks those revenues for affordable housing, mental health, homeless services and similar programs.
“If you care about homelessness and crime, these are all things the city has used marijuana sales to work on,” Bradley said.
