Apr 18, 2024 - News

Colorado's marijuana industry looks to stabilize after record pandemic sales

Illustration of a cannabis leaf decal on a broken window.

Illustration: Lindsey Bailey/Axios

Ripple CEO and co-founder Justin Singer, whose company specializes in cannabis edibles, is blunt about the marijuana industry's current state: "It's a giant clusterf**k."

The big picture: Dispensary sales statewide are dropping, meaning less tax revenue, fewer new retail shops and some manufacturers calling it quits due to the economic struggles.

Why it matters: It's a collective reminder that the industry's struggles continue, despite record sales during the pandemic that made it look nearly indestructible.

By the numbers: Tax revenue from both medicinal and recreational sales reached $48.1 million in Denver last year, down from $56.2 million in 2022, and considerably less than the record $72.9 million the city collected in 2021.

Reality check: Legal marijuana sales are available in some form in more than half of all U.S. states, including neighboring Arizona and New Mexico, meaning Colorado and its capital city have more competition.

  • Denver excise and licenses executive director Molly Duplechian, whose agency oversees licensing for marijuana, tells us the industry is essentially stabilizing after years of growth.
  • The city used to have a cap on licenses available for recreational marijuana, and in recent years, it's begun accepting more applications for related licenses like delivery, manufacturing and cultivation, excise and licenses spokesperson Eric Escudero tells us.

What they're saying: "There is absolutely no reason for people to come to Colorado for cannabis tourism," University of Colorado Regent and Simply Pure co-founder Wanda James tells us.

  • James, who opened Colorado's first Black-owned dispensary in 2009, says regulations have made it difficult to open spaces for legal consumption sites that can draw tourists.
  • 10 years after recreational sales started, Denver has just one licensed establishment, the Coffee Joint, where you can legally use pot outside your own home.

The intrigue: Missy Bradley, vice president of marketing at Ripple, tells us local storefronts owned by multistate operators — often out-of-state companies — are not paying close enough attention to the companies they're doing business with in Colorado.

  • Singer says this leads to collections issues: He estimates roughly 11% of invoices are paid on time from multi-state operators, compared to about 22% from other companies they work with.
  • "It really hurts us if we don't get paid on time," Bradley says. "We can't operate if we don't have money."

Zoom in: Providing low-cost but quality products is one way Singer said his company has stayed afloat.

  • The company started selling Ript, a 10-edible pack for $6 in November 2022. Bradley says it can cost $14-$24 for similar edibles at local dispensaries.

The bottom line: Support for recreational marijuana and the money it generates remains high.

  • 71% of voters in Colorado believe it should be legal for adults, according to a first-time poll released Wednesday by Colorado Leads, a group made up of cannabis business leaders.

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