Colorado’s cannabis tax collection fell in November, despite sales ticking up in October.
Sales rose to $113.3 million in October, as the state’s maturing market continues to see growing competition from other states and falling prices.
That increase in monthly sales was up less than 1% from September’s $112.4 million, while tax collections dropped about 3.7% to $20.1 million in November from $20.9 million in October, according to data from the Colorado Department of Revenue.
Sales today are less than half what they were during the market’s peak, down roughly 45% from March 2021’s high of $207.1 million during the pandemic, state data shows. The medical marijuana market has fallen even further, with October’s $12.4 million in medical sales down nearly 65% from July 2021’s $35 million.
The market appears to be finding some stability in recent months, with total sales hovering between $112 million and $123 million since summer. After dropping to $113.8 million in June, sales rose to $122.5 million in July and August before settling back to around $113 million in September and October.
But the steadier pattern also shows a transformed market. October’s sales are 25% lower than the same month in 2019, before COVID-19. The decline in medical marijuana is particularly sharp – that side sold an average of $34.8 million per month in summer 2021, but only $13.2 million per month this past summer.
Recreational marijuana now makes up about 89% of all cannabis sales in the state. It’s a complete reversal from when legal sales began in January 2014, when medical marijuana made up nearly 70% of the market.
A September report from state lawmakers detailed deeper problems that began in 2018. The number of licensed marijuana growers has fallen 17% in the past year as too much supply drove down prices. Wholesale prices have plunged 63% since January 2021 as more states legalize and compete with Colorado.
The state collected $3.1 million in November from taxes on wholesale marijuana sales and $14.5 million from retail sales taxes. That retail tax revenue is down about 40% from when it peaked at $24.2 million in September 2021. The state also brought in $1.1 million from business licenses and fees – the smallest amount since early 2020. Colorado taxes marijuana sales at several levels: 15% when businesses sell to each other, another 15% when stores sell to customers, plus the standard 2.9% state sales tax.
So far this year, Colorado has collected more than $236.2 million in marijuana taxes and fees, with total sales reaching $1.17 billion through October. Since recreational sales began in 2014, the industry has generated $16.6 billion in sales and $2.85 billion in tax revenue.
State analysts expect small improvements ahead but warn that Colorado’s market will continue to deal with pressure as more states legalize marijuana and local prices stay low.
The market appears to be finding some stability in recent months, but even the steadier pattern still shows a transformed market. Read More
