Colorado’s marijuana industry is reporting the lowest income levels in half a decade and as a result, the state Marijuana Enforcement Division or MED is raising operational fees for the cannabis industry to try to stay out of the red. KGNU’s Hannah Leigh Myers speaks with longtime cannabis correspondent Leland Rucker for the details.
The Cannabis Report – July 20th, 2023
MED Announces Fee Spike As Colorado’s Cannabis Industry Reports Lowest Sales In Half Decade KGNU News
A recent article in Yahoo Finance says the “global cannabis market size was valued at USD 43.72 billion in 2022 and is anticipated to expand from USD 57.18 billion in 2023 to USD 444.34 billion by 2030, exhibiting a CAGR of 34.03% over the forecast period.” The article claims the surge is driven by “the increasing recognition of the product considering its therapeutic applications and legitimate medicinal benefits.” But perhaps a decline in cannabis stigma in general, for recreational and therapeutic applications, in addition to other factors, is playing more of a role in the worldwide increase in the cannabis market than the authors realize.
At the same time, Colorado’s marijuana industry dubbed weed sales for this year’s 4/20 “the worst” in five years. The Marijuana Industry Group, a Denver-based trade association, calls Colorado a “struggling” industry, with falling sales, business closures and layoffs, too much supply, not enough demand, increased competition in other states, dropping prices, a dearth of cannabis tourism, the draw of black market weed and more. I’m buying pot for less than when it was illegal right now.
April’s marijuana sales – medical and retail combined – stood at close to $132 million, which counts as the lowest number in five years, according to the Colorado Department of Revenue. This year, total medical marijuana sales looked especially dismal in April at almost $17 million. That’s the lowest amount ever recorded for that month since sales first started in January 2014.
“Colorado cannabis small business owners count on the weeks leading up to the 4/20 holiday to be some of the strongest sales of the year,” said Truman Bradley, executive director of the Marijuana Industry Group. His association estimates that “2023 sales are on track to be down even further than 2022.”
In Denver, the number of medical marijuana store licenses has fallen 27% over the past five years, to 144 licenses this year, according to its annual marijuana report. In 2014, that number was 255. But in 2023, the number of retail marijuana store licenses in Denver has jumped to 188 – a 13% increase over the past five years. That’s a rise from 109 licenses in 2014.
Product delivery is finally taking off, delivery permits associated with stores grew from 19 last year to 24. The transporter license is noted by the report as “the most-issued license type to social equity applicants” who come from marginalized backgrounds.
Only 20 marijuana business license owners in the city are considered “social equity owners,” while 1,017 aren’t. About 79% of total owners identify as men, with 19% as women, over 1% as other and 0.3% as transgender. Around 90% of the owners identify as white, followed by 4% as Black and 3% as multiracial, according to the report.
So, to help out, the MED is raising its prices for entry. Operational fees for Colorado’s 2,700-plus registered marijuana business licensees are going up. In an announcement sent to marijuana business owners on July 5, the state Marijuana Enforcement Division confirmed that it had adopted the increased application and licensing fees as of July 1. The price hikes, which will average about 8 percent, were adopted as the MED faces its first negative cash balance since recreational pot sales began in Colorado in 2014.
Most marijuana business owners are opposed the proposal to increase fees, since Colorado’s pot industry is dealing with its first sustained recession. The MED and its overseeing authority, the Colorado Department of Revenue, depend on business fees for funding their marijuana-related efforts.
Created to regulate Colorado’s first-of-its-kind recreational marijuana industry, the MED has received operational money from the state legislature in the past, but the majority of its funding comes from licensing fees and fines on dispensaries, growing operations and other legal pot businesses. That funding is falling short, though, as inflation and rising government salaries increase program expenses, according to DOR Executive Director Mark Ferrandino (who’s about to become the head of the state Planning and Budgeting office).
The Marijuana Industry Group says the decision to raise fees is “a serious blow” to business owners.
MIG Executive Director Truman Bradley told Westword, “Our sales are down by nearly $100 million, and a recent jobs report showed that the industry lost more than 10,000 Colorado jobs last year.”
About Leland Rucker:
Leland Rucker is a journalist who has been covering the cannabis industry culture since Amendment 64 legalized adult-use in Colorado, for Boulder Weekly, Sensi, and The News Station. Leland has been keeping KGNU listeners up-to-date on cannabis news for nearly a decade.