According to representatives of the cannabis industry, Colorado’s medical marijuana sales sit at their grimmest point, leaving the state’s cannabis industry “on the brink," reported The Modesto Bee.
What Does The Colorado Department Of Revenue Say?
In July, the state’s recreational and medical cannabis sales hit almost $154 million, according to the Colorado Department of Revenue (CDOR) figures.
Image by The Colorado Department of Revenue
So far this year, total sales have reached more than $1 billion. Yet medical marijuana sales for July only reached just over $18 million, "the lowest monthly figure ever recorded since January 2014," when retail sales were legalized in the Centennial State.
Adult-use sales had it better at more than $135 million, which is a jump from April, May, and June figures. Still, that's significantly lower than last July at nearly $168 million. “There is a dangerous perception that Colorado’s cannabis industry is a cash cow,” said Tiffany Goldman, board chair of the Marijuana Industry Group. “This perception is false.”
The state employs more than 41,000 people to work in the industry. However, Goldman expressed that a number of small cannabis businesses had to close. As an example, Buddy Boy Brands' seven metro-area dispensaries closed permanently in June, with owner John Fritzel blaming "a tax balance," a market downturn, and high costs.
“In the future, we hope lawmakers and elected leaders will understand the sad reality that Colorado cannabis businesses are struggling and that we must work to protect an industry that provides good-paying jobs and tax revenue for our state,” Goldman added.
Nevertheless, other chains are expanding, such as LivWell Enlightened Health. "It’s set to dominate the Colorado market with 26 dispensaries after PharmaCann recently announced its plan to acquire boutique dispensary chain The Clinic."
Ryan Shipp, director of retail sales for independently owned Native Roots Cannabis Co., disagrees that the state's cannabis industry is teetering on the brink overall, calling medical and recreational "two completely different markets."
On the recreational side, more states are legalizing it, so “cannabis tourism is declining.” On the medical side, "we expected a decline" in sales, he said, pointing to House Bill 1317 as a contributing factor, which imposes stricter rules and limitations regarding medical cannabis treatments.
The legislation requires physicians to provide specific cannabis dosage regimens for their patients. In addition, it requires doctors to assess the "mental health history" of their patients. New patients, ages 18-20 seeking a marijuana recommendation for the first time, must obtain a diagnosis from two physicians, each from a different medical practice.
HB 1317 also limits the amount of medical cannabis concentrates a patient can legally purchase in one day. The limit is 8 grams for those over 21 years of age.
What Does BDSA Say?
BDSA, a leading cannabis data firm, recently announced an update of its cannabis market forecast, a five-year rolling global forecast by country, state, province, channel, and category.
According to the BDSA data, "The U.S. and global cannabis sales are on track for growth into the future." However, data stated that “the most dramatic sales declines” will likely be seen in mature adult-use markets, such as Colorado, with newer markets instead spurring sales. Also, it notes the trend of falling medical cannabis sales, as “patients have access to increasing variety and lower prices in neighboring adult-use markets.”
“The ‘hockey stick’ trend of sales growth seen in the early years of legal cannabis has passed, and economic and regulatory headwinds are exerting pressure on legal cannabis markets,” said Roy Bingham, CEO of BDSA. “Though mature legal cannabis markets in the U.S. saw sales soften in 2022, the cannabis market is still forecast to see topline growth in 2022, driven by strong sales in new and emerging markets, such as the populous states of New Jersey and New York.”
“Despite an inflationary environment and concerns about a recession that dampened consumer spending, legal cannabis sales in the U.S. will reach $27 billion by the end of 2022, a jump of 7% over 2021 sales of $25 billion,” stated the BDSA report.
“The U.S. cannabis market is projected to continue seeing steady growth over the next few years, driven largely by the opening of new and emerging adult-use markets,” Roy Bingham told Benzinga. “In today’s inflationary environment, competition surrounding pricing and supply is expected to increase as adoption rate begins to slow in established markets.”
Photo: Courtesy Of Josh Rinard On Unsplash
