Colorado Marijuana Industry Firing on All Cylinders as Annual Sales Hit $700M
By John Schroyer
Behold, the power of cannabis.
Dispensaries and retail cannabis stores in Colorado generated nearly $700 million in marijuana revenues last year, when the state became the first market in the nation to launch recreational MJ sales.
The total includes just under $386 million in MMJ sales and more than $313 million in recreational revenues, according to the latest data released by the state.
Though the final number is far short of what some had estimated early in 2014 – Gov. John Hickenlooper at one point said he expected sales to hit nearly $1 billion – the tally is impressive nonetheless, underscoring the potential of the cannabis industry.
“It’s a pretty good starting number,” said Michael Elliot, executive director of the Marijuana Industry Group. “I think everyone was taking really big guesses in terms of how much that number was going to be.”
Jason Katz, a partner at LoPro Consulting in Denver, said the figures in Colorado are “very exciting.”
“It’s an excellent indicator for other states,” Katz said, adding that states where rec may be legalized in coming years could look at Colorado as a benchmark for potential sales and tax revenues.
Of particular note is that medical marijuana sales held their own, in large part because of low taxes, which make over-the-counter purchases much cheaper for registered patients than for recreational customers.
MMJ sales hit an all-time high of $36 million in February despite the rise of the rec market. They dipped in the months after and fluctuated the rest of the year, but annual MMJ revenues still rose about 17% in 2014, according to Marijuana Business Daily’sestimates.
Rec sales experienced explosive growth as more shops and cultivators opened across Colorado and tourism began playing a bigger role, with edibles accounting for a big share of that total.
In January, when only a handful of rec stores were operating, sales hit $14.6 million. By December, that number jumped to $35.1 million, making the final month of the year the best for Colorado’s rec industry.
Recreational sales also outpaced medical in several months out of the year, including December, when MMJ revenues hit $31.7 million.
Rec is likely to continue outpacing medical sales, Katz predicted, and not only in the busy tourist months. Katz’s attributed rec’s dominance of the medical market to two things: More retailers will be coming online this year, and there’s a lack of research to back up the medical uses of cannabis.
“We’re inevitably headed to two segments of the industry, one medical and one rec. But rec is much easier in terms of it’s just about retail, whereas the medical piece is going to require years of research and development before we start to see real breakthroughs,” Katz said.
Regardless, there’s still room to grow, Elliot said.
“There’s obviously still a black market that is problematic, and I think the numbers are going to continue to get better as more licensees open up, and as it becomes harder for the black market to compete,” Elliot said. He pointed out that Aurora, one of the largest municipalities in the state, only recently allowed rec shops to begin operating. And other counties and towns will most likely follow in 2015.
Marijuana revenues also pumped roughly $76 million in taxes into state coffers, including about $44 million from rec sales alone.
But up to $30.5 million of that may have to be refunded to taxpayers, due to a complex tax provision in the state constitution, according to The Associated Press. So it’s too early for state officials to begin planning on how much in marijuana taxes they’re going to have available to spend.
And even if some may be disappointed with the final tally in Colorado, the state is still faring much better than its counterpart in the northwest.
According to the most recent data from Washington State’s Liquor Control Board, rec sales for seven months – between July (when rec sales began) and February 2015 – totaled just under $90 million.
John Schroyer can be reached at email@example.com