Declining sales, shuttered businesses and shifting preferences are negatively impacting the state’s weed industry
The cannabis industry in Colorado, once a beacon of hope and profit, is now grappling with a series of challenges that have emerged in the wake of the global pandemic. A recent report from The Denver Post sheds light on the evolving landscape of Colorado’s cannabis market, painting a picture of declining sales, shuttered businesses, job losses, and shifting consumer preferences.
In recent years, Colorado’s cannabis industry reached impressive heights, boasting a peak of $226 million in combined recreational and medical cannabis sales. However, the current reality is starkly different, with a considerable decline in sales and a surge of small businesses struggling to stay afloat.
Medical cannabis, which was once a steady revenue stream, has since experienced a significant drop in sales. February saw a record low of $15 million in medical cannabis sales, the lowest collection since the inception of retail sales in 2014. And, while March witnessed a modest uptick in medical cannabis sales, reaching approximately $17 million, this figure was still $5 million lower than the same period the previous year. Recreational sales for March this year amounted to $122 million, but even this seemingly substantial figure was a $17 million decrease from the previous year’s numbers.
The aftermath of the COVID-19 pandemic has left a lasting impact on numerous industries, and the cannabis sector is no exception. Despite the U.S. Department of Health and Human Services declaring the end of the COVID-19 public health emergency, cannabis business owners continue to grapple with challenges stemming from oversupply, decreased demand, plummeting prices, and a lack of cannabis tourism.
Colorado is not alone in facing these challenges. The legalization of recreational cannabis in neighboring states such as Montana, Arizona, and New Mexico has introduced stiff competition. This increased competition has not only drawn potential consumers away from Colorado but has also intensified the struggle for market share.
Vangst, a prominent cannabis job company, recently published its 2023 Vangst Jobs Report, revealing a 2% decrease in cannabis jobs nationwide. Colorado was hit particularly hard, ranking second in the list of states with the highest cannabis job losses. The state also found itself in the sixth position for states with fewer cannabis job opportunities compared to the likes of California, Michigan, Illinois, Florida, and Massachusetts.
The challenges faced by the cannabis industry extend to both small and large businesses. Curaleaf, a significant player in the industry, made the strategic decision to close down its offices in Colorado, California, and Oregon, attributing this move to the thriving competition posed by the black market.
The struggles within the cannabis industry are not confined to the businesses themselves; they are also impacting the real estate market. The National Association of Realtors noted a decline in commercial property purchases by marijuana-related businesses and a corresponding rise in leasing activity.
Entrepreneurs like Renée Grossman, who have been part of the industry for years, are now facing the brunt of these challenges. Grossman, who founded multiple retail storefronts and expanded into cultivation and manufacturing, voiced her concerns about oversaturation in the market to the Denver Post. She highlighted the influx of stores, cultivation sites, and products as contributing to the industry’s current woes.
Grossman’s sentiments echoed the sentiments of many investors who are now awaiting the right time to enter the market.
Even the promise of cannabis tourism, which was once a driving force for Colo-rado’s cannabis industry, has dwindled. The proliferation of recreational cannabis in various states has diluted the allure of traveling to Colorado for cannabis-related experiences.
Native Roots Cannabis Company’s vice president of marketing, Buck Dutton, pointed out to the publication that sales for 4/20 decreased compared to previous years, as fewer people felt the need to travel for such occasions.
Truman Bradley, the executive director of the Marijuana Industry Group, likened Colorado’s current situation to a glimpse into the “ghost of Christmas future.”
The initial excitement that surrounded Colorado’s pioneering status as the first state to legalize recreational cannabis has been replaced by a more somber reality. Bradley stressed the need for the industry to become leaner and for state legislators to reassess the framework of legalization, acknowledging that the industry’s land-scape must evolve to ensure its survival.
While it’s unclear what will happen in the future, what is clear is that the can-nabis industry in Colorado is navigating a complex and challenging post-pandemic landscape. Declining sales, increased competition, oversupply, and shifting consumer preferences have combined to create a difficult environment for both small and large cannabis businesses.
As the industry looks to the future, it will require adaptation, innovation, and potentially legislative changes to regain its former momentum and secure a sus-tainable future.
