The race to the bottom continues
According to industry officials, sales of medical cannabis in Colorado are currently at their lowest point, marking a turning point for the state’s cannabis industry.
Cannabis revenue in Colorado was nearly $154 million for medical and recreational combined in July, according to figures from the Colorado Department of Revenue. Total sales for this calendar year to date have exceeded $1 billion.
Even so, medicinal cannabis sales in July totaled just over $18 million, the worst monthly total since the state legalized retail sales in January 2014. According to Tiffany Goldman, CEO of Cannabis Industry Group, “There are It’s a dangerous notion that Colorado’s marijuana sector is a cash cow, but that’s a misleading impression, she said.
Recreational cannabis sales fared better, topping $135 million, up from April, May and June figures. That’s a lot less than last July, however, at about $168 million.
MARIJUANA MARIJUANA MARKET PRICES
Every three months, the DOR publishes its AMR (average market prices) for wholesale cannabis. The average market price evaluates the median cost of various wholesale cannabis components, including plant material, trimmings, and flower, destined for extraction, even after the word “average” appears in the acronym. Since the DOR began collecting this information, two of the components have declined.
The latest average market price report shows that cannabis flower is currently selling for $658 per pound, down almost 7% from the previous lowest average market price of $709 published in June. Trim intended for extraction and infused products also fell to $76 per pound, the lowest since monitoring the category began in 2018 and down 37 percent from the previous low of $120.
According to the DOR, the cost per pound of cannabis flower for regular cutting ($249), immature plants ($13 each), extraction ($277), whole plants ($126) and seeds ($4 each) and all other cannabis products, remained unchanged.
IMPACT ON CANNABIS BUSINESSES
More than 41,000 people are directly employed in the Centennial State’s industry, though Goldman has spearheaded the closure of tiny cannabis businesses. Owner John Fritzel attributed the June closure of Buddy Boy Brands’ seven Subway pharmacies to “a tax balance sheet,” a downturn in the industry and exorbitant prices.
Goldman stated that going forward, they hope policymakers and elected officials will come to terms with the sad fact that Colorado’s marijuana businesses are suffering and that we must work to preserve a sector that provides our state with good-paying jobs and tax revenue .
Other chains, including LivWell Enlightened Health, are still growing. With 26 pharmacies, it is expected to dominate the industry in Colorado after PharmaCann recently announced its intention to buy boutique pharmacy group The Clinic.
According to Ryan Shipp, retail director of independently founded Native Roots Cannabis Co., the state’s overall cannabis business is not on the brink of collapse. He describes the recreational and medicinal cannabis markets as “two separate markets.”
Both are declining, but for different reasons, he added. Cannabis tourism is declining as more states legalize recreational cannabis use.
He noted that House Bill 1317 was a significant factor in the medical sector, adding that the drop in sales was due to this factor. Patients using medical marijuana now have to comply with additional regulations, and the amount of the substance they can purchase per day has been capped at eight grams. For people between the ages of 18 and 20, the upper limit has been raised to two grams.
“I don’t think we expected such a significant reduction,” Shipp continued in a phone interview. Some of them choose to avoid this procedure and only buy on the recovery side, since getting a medical card successfully today is a bit harder than it used to be.
He is optimistic that the decline in sales has flattened out, although he notes that Native Roots has seen a steady increase in medical patients over the past few months. Shipp said the organization is committed to expanding its medical division. However, he does not expect to return to the top of the medical market.
Colorado’s marijuana sector is still optimistic, having breathed a sigh of relief last week after a ballot initiative to raise cannabis taxes in the Mile High Town was defeated.
THE FUTURE OF CANNABIS IN THE STATE
Based on an ongoing market forecast by cannabis analysis firm BDSA, marijuana sales are expected to increase globally and in the United States going forward. Annual global marijuana sales are expected to grow from $30 billion last year to $57 billion in 2026, with the U.S. market growing from $25 billion to $42 billion in 2021.
According to figures released Tuesday, the country’s legal cannabis sales are expected to hit $27 billion by the end of this year, up 7% from last year’s sales. But according to the BDSA, older-adult markets like Colorado would likely see “the sharpest sales declines,” while newer markets are likely to see sales increases. As patients gain access to more variety and discounted prices in nearby adult-use markets, it is monitoring the trend of declining medical marijuana sales.
According to BDSA CEO Roy Bingham, the “hockey stick” trajectory of revenue growth seen in the early years of legal marijuana is over, and regulatory and economic challenges are putting pressure on legitimate marijuana markets. The overall cannabis market is still expected to grow in 2022, led by strong sales in emerging and developing markets like the populous states of New York and New Jersey, although sales in the mature licensed marijuana markets in the United States decreased in 2022.
I’d like to think that this drop in Colorado marijuana sales can be directly linked to the fact that many other states have legalized recreational marijuana. That reduces revenue from cannabis tourism, which means outsiders don’t have to come to Colorado to have fun as much as they did in the past.
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