Recently updated figures from Colorado’s Department of Revenue (CDOR) show legal cannabis is still big business, but not as lucrative for the state’s coffers as it once was.
Cannabis has been legal for medical use in Colorado since 2000. In 2012, Colorado was also among the first states to legalize recreational marijuana, and retail sales kicked off in 2014. Since that time and up until the end of February last year, total retail and medical sales have amounted to more than $15.73 billion dollars.
But CDOR figures show sales in February this year only reached a total of $114,405,355 (recreational and medical combined) – which was the lowest monthly tally since February 2017. In terms of medical marijuana sales specifically, February 2024 saw $13,833,825 in sales, which was the lowest since at least January 2014. It’s a far cry from the biggest month, which was July 2020 when $43,268,565 in medical sales were racked up.
Retail medical marijuana sales in February reached $100,571,530 – a long way off the biggest month, which was $167,805,366 in July 2021.
The situation is impacting state revenue. Medical marijuana is subject to a 2.9 percent state sales tax in Colorado. But the real cash cow for the state is retail marijuana, which is subject to a 15 percent sales tax and a 15 percent excise tax. The excise tax is levied on the first transfer of marijuana from a wholesaler to a processor or retailer.
So, why are sales totals dropping? Some of it is down to increasing competition pushing down prices. However, it’s not all bad news – HeadSet indicates the market has since been on a path to recovery, and says more recent months have shown some signs of positive growth.
But the lesson for other states eyeing riches from legalization is to be conservative in estimates of how much marijuana may bring in. It’s not just Colorado where marijuana tax revenue is falling short of predictions. For a more detailed analysis of what’s happening where and why, see this article by Boyoung Seo, Assistant Professor of Business at Indiana University.
