The early numbers for Colorado marijuana sales are in and the estimates show that cannabis is a verifiable billion dollar industry for the state. In August, total 2017 sales for marijuana in Colorado crossed the $1 Billion mark, which is on pace to set a whopping year over year growth rate over 20% for the third straight year.
Since recreational sales went legal in Colorado nearly four years ago, the state has sold more than $3.2 Billion in marijuana. The bulk of which are recreational “adult use” purchases available to anyone over the age of 21.
The cost of a gram has been on the decline since 2016 due to maturation of the supply chain and construction of modern grow facilities driving production costs down. Despite this, Colorado marijuana sales have regularly topped $100 million per month.
Total sales rates growing in the face of the falling prices means that consumer demand and consumption is growing even more rapidly, likely due to new segments of consumers entering the market. Demand signaling remains extremely strong in Colorado and continued growth should be expected as the stigma around cannabis decreases and more mainstream consumers turn into customers.
Putting up record numbers since legalization in 2014, Colorado has now collected a cumulative half a billion dollars in tax revenues for the state. According to the VS Strategies report, over half of the Colorado tax revenue collected from marijuana sales, over $250 Million, has gone directly to support public K-12 education.Colorado tax revenue from marijuana gives $250M to support K-12 Education since 2014. #cannabis… Click To Tweet
By the end of year, Colorado stands to collect over $225 Million in tax revenue from marijuana sales for 2017 alone, and is intent on further capitalizing on the industry’s growth. Earlier in the year, Colorado state legislature passed a measure to increase taxes a net total of 2.1% on recreational marijuana sales, an additional $26M in yearly revenue.
The budget allows for an increase in the recreational marijuana special sales tax from 10% to 15%, while eliminating the normal 2.9% sales tax applied to all retail goods. At over a billion dollars a year in sales, each percentage point increase in taxes equates to over $10 million a year generated on pot.
Year over year growth slows as industry normalizes
While it is clear the so called “green rush” is far from over in Colorado, year over year growth does show signs of stabilization. Colorado’s yearly growth rate for marijuana sales have continued to slow, projected to be in the low 20% range for 2017, down from 30% growth rate in 2016 and over 40% in 2015.
As Colorado continues to reap the rewards of legalized marijuana, other states are starting to take notice and move towards passing legalization measures of their own. So far a total of eight states, (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington) have legalized recreational use of marijuana, though not all of those state laws have gone into effect.
Recreational marijuana in California, arguably the biggest market for cannabis in the world, is set to start issuing licenses to sell legal marijuana January 1, 2018. California’s medical marijuana sales already approach the $1 Billion mark, with approximately $845 Million in sales in 2016. This more than doubles Colorado, the second biggest medical marijuana state, which topped out around $400 Million in sales.
Though Californians should expect a stumbled start with the state’s regulations still routinely changing, due to the huge black market and undisclosed dispensary sales in California, analysts expect marijuana to be a $5 Billion market in the state.