A surprising turn for Colorado’s cannabis industry

by DGO Staff

After massive sales during the pandemic, weed-related jobs and sales are on the decline

In an unprecedented twist, Colorado’s booming marijuana industry is now experiencing a sharp downturn, with job opportunities becoming scarce and sales plummeting. Headlines have been warning about the decrease in the state’s cannabis sales, and a recent report reveals that the workforce has also dropped by a staggering 28%.

This marks a first for the Centennial State, which legalized adult-use cannabis sales in 2014. While similar trends are emerging nationwide, Colorado seems to be bearing the brunt of the impact.

From February 2022 to the same month this year, nearly 10,500 jobs were slashed within the state’s cannabis sector, reducing the total workforce to 27,856. This decline is striking when compared to the industry employment rates in other states:

California: 85,593
Florida: 29,011
Illinois: 29,925
Massachusetts:28,370
Michigan: 35,405

It’s unsurprising that a vast state like California has surpassed Colorado, but the contrast with Florida, which only permits medical marijuana, is truly eye-opening.
The downward trend in Colorado’s employment is mirrored by a staggering 61% drop in wholesale cannabis prices compared to 2021.

Truman Bradley, executive director of the Marijuana Industry Group, told West-word, “I’m not surprised. The industry has gone through a 20-month downturn with no end in sight. Sales are down over 20% on the recreational side and over 45% on the medical side this year.”
The Colorado Department of Revenue reported a 15% drop in sales, with $129.4 million recorded in the first month of this year compared to $151.1 million in January 2022. The figure represents a decline of over 30% since January 2021.

This slump is rippling through the entire industry, affecting accountants, software providers, and other business services, all of which are cutting staff. State and tax revenues are also dwindling.
Bradley observed, “The economic impact of the Colorado cannabis industry is real, and unfortunately, we’re seeing that a contraction also has ripple effects.”

A glimmer of hope amid the challenges
While Colorado’s cannabis industry faces difficult times, some economic projections offer a ray of hope. The Governor’s Office of State Planning and Budgeting anticipates a 16% growth in marijuana tax revenue by 2024. However, the current employment cuts serve as a stark reminder of the ongoing challenges stemming from the 2020 public health crisis.

“COVID changed a lot of things in cannabis and other industries,” Bradley remarked. “After a big shock like that, it’s hard to know what the world would’ve been like without that shock. We went through the best year we’ve ever had, immediately followed by a downturn. It’s not just that other states have legalized. We’re also dealing with high inflation that we haven’t seen since cannabis has been legal.”

Considering these factors, it’s unclear what direction Colorado’s industry should take. Bradley expresses “long-term concerns” about the current 15% excise tax on wholesale marijuana.

Colorado is one of only three states that impose an excise tax on wholesale cannabis transfers, a decision approved by voters during the initial legalization in 2012.

Bradley said, “When Colorado voted for the various tax plans in place now,
in some cases, we were the only legal marketplace to buy cannabis for almost one thousand miles. That’s not the case anymore, so decade number two needs to look different than decade number one if the Colorado cannabis industry is going to stick around.”

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