How New Mexico’s legal market is affecting the Centennial State
Colorado is feeling the heat. Ever since New Mexico legalized marijuana, the Centennial state has been seeing a decline in sales in the cannabis industry. Colorado was the first state to legalize cannabis and that meant people came from far and wide to spend their money within its borders. Now that neighboring states like New Mexico have passed legislation and legalized cannabis, the sales in Colorado are taking a hit.
Most cannabis business owners knew this would happen at some point. Some see the decline as a temporary lull, and others feel the effects will be long lasting. Colorado saw its largest revenue ever in 2021, where sales topped 2.22 billion dollars. The state collected an impressive $423 million in taxes from the 2021 sales alone. The end of 2021 saw a total of nearly $2 billion in taxes since legalization in 2014.
Multiple factors are affecting the Colorado cannabis business. Some think that the current gas prices are affecting sales. Some say it’s the economy. Others say it’s neighboring states becoming legal or the rising cost of housing and the cost of living. Maybe it’s a little bit of all of them.
Cannabis is currently more expensive in New Mexico’s legal market than it is in Colorado. Currently the price of a gram on the black market is $5 a gram, while it’s $10 on the legal market. In Colorado, legal grams are going for $5 as well. According to the state Marijuana Enforcement Division, the average price per pound has fallen nearly 60% since January of last year. Currently a pound of flower is selling for roughly $700 which is almost half the price it was selling for in 2021. The trim used for things such as edibles, tinctures and oils was going for around $425 per pound last year. This year is seeing the same amount sell for $225 per pound. This is the lowest price since the state began tracking retail prices in 2014.
It appears that out-of-state consumers aren’t willing to spend the extra money on gas to drive for Colorados cheaper prices. People can stay in the state they live in, pay more per gram, and save money by not making the drive to Colorado for a cheaper product. Some see this as a temporary problem in hopes the economy will soon level out. New Mexico started off with around 250 retailers who were licensed and ready to go from the first day of legalization. This number alone is pretty staggering when you think that in one day Colorado businesses essentially got 250 new competitors in a single day.
The continual increase in cost related to the Colorado housing market, as well as the cost of living in the state, are continually becoming less appealing to potential new residents and even some vacationers. People are already starting to look for comparable places that offer the same things that Colorado can offer, but with a lower price tag. The current economy is forcing people to stretch their dollars and unfortunately that means spending less on cannabis related items. Colorado benefits greatly from the tax dollars received from cannabis sales. Tax revenue funds non-profits, school maintenance, grants for school health care and health care professionals, early literacy programs, dropout and bullying prevention and multiple other areas. Missing out on this revenue will only hurt the areas it was meant to help.
Colorado was lucky to be one of the first states to legalize cannabis and greatly benefitted from it for years. It caused an influx of people moving to the state, and those people spent money in the industry. Colorado still is a cannabis and tourist destination that attracts people from all over. As long as Colorado stays on the forefront of the cannabis industry, it should keep attracting people from all over, especially once the economy settles back down and people can cheaply drive across the country to get those Colorado highs they crave.
