Colorado Cannabis Sales: Recent Trends and Future Prospects
The TDR Three Key Takeaways regarding Colorado and the cannabis industry:
- Colorado cannabis sales fall to $1.53 billion in 2023, signaling market challenges.
- The slight recovery in Colorado sales suggests effective new marketing strategies.
- Colorado cannabis industry sees license reductions amid market maturity.
Colorado cannabis sales have recently seen a short-term increase, contrasting sharply with a significant decline over the past few years. According to data from the Colorado Department of Revenue, total cannabis sales in 2023 were $1.53 billion, a notable drop from the $2.23 billion reported in 2021. This decline can be attributed to factors like market saturation and changes in consumer behavior.
Colorado’s cannabis market experienced an 11% increase in sales in March, reaching $126.6 million compared to February’s $114.4 million, as indicated by recent state data. This growth was also reflected in the rise in tax revenues, with the Colorado Department of Revenue collecting $20.8 million in March and $23.2 million in April. These numbers suggest that April sales might exceed those of March, possibly pointing to a stabilization in the market.
The state’s cannabis industry has been experiencing a leveling-off due to regulatory challenges, increased competition, and a more mature market. The average price per gram of recreational marijuana flower decreased from $4.83 in 2021 to $3.43 in 2023, and the number of marijuana business licenses also dropped significantly.
Despite this overall downward trend, cannabis sales saw a significant increase last month. The Colorado Department of Revenue indicated that while 2023 was the worst year since 2017 for cannabis sales, the past month showed a positive trend, suggesting potential seasonal variations or effective marketing strategies by businesses. This resurgence is a promising sign that the market might be stabilizing after a prolonged decline.
Nationally, cannabis prices have been relatively stable over the past year. According to Cannabis Benchmarks, the U.S. Spot Index is currently at $1,008 per pound, down 6.4% from the 2023 closing price of $1,077. The Index has averaged $1,024 per pound this year, with prices expected to rise slightly to $1,035 per pound by the end of the year. This stability suggests that while local markets like Colorado may experience fluctuations due to specific conditions, the broader national market remains relatively steady.
The low cannabis prices in Colorado are specific to the state and result from increased competition at the state level. The state has issued a large number of licenses, leading to a saturated market and driving prices down. This oversupply has created intense competition, forcing businesses to lower prices to attract consumers, which in turn impacts overall revenue.
The cannabis market’s initial boom post-legalization has given way to a more stable and mature industry. Companies that thrived initially are now facing challenges as the market becomes more competitive and as other states legalize cannabis, reducing Colorado’s appeal as a cannabis tourism destination.
While Colorado’s cannabis sales have experienced a short-term boost, the industry faces significant long-term challenges. The recent uptick in sales provides a glimmer of hope, suggesting that with the right strategies, there may be opportunities for recovery and growth in this evolving market. Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.
