Legal marijuana is officially a $1 billion business in the U.S. Tax data recently released by the Colorado Department of Revenue indicates $1.3 billion worth of cannabis was sold through the state’s marijuana dispensaries last year.
In 2016, sales of recreational weed in Colorado surpassed $875 million, while medical marijuana accounted for $438 million. Based on these figures, Colorado can expect to collect approximately $199 million in taxes and fees from the cannabis industry, according to a report from the Washington Times. By comparison, total sales of both recreational and medicinal marijuana equaled approximately $996.2 million in 2015 and $699.2 million in 2014.
In eight of the 12 months in 2016, sales of legal marijuana totaled more than $100 million. The summer months were the strongest at $376.6 million total combined sales for July, August, and September.
“Colorado has had a really good run, being the first mover,” said Miles Light, an economist with the Marijuana Policy Group, as reported by The Cannabist. “Now, as other states legalize, some of these external benefits that are occurring are going to be eroded.”
Colorado voters approved the legalization of recreational marijuana in November 2012, with the first licensed cannabis dispensaries opening in January 2014. Following the trend Colorado started, other states, including Alaska and Washington, legalized smoking pot shortly thereafter.
Now, even more states are seeing new tax dollars in their sights. California, Nevada, Massachusetts, and Maine have also legalized the drug, but have yet to create and implement the rules governing the sale and distribution of marijuana.
While the marijuana industry is certainly growing at a steady pace, the wholesale price of cannabis is falling. Some marijuana dispensaries, like Denver-based Medicine Man, have seen a consistent uptick in the number of customers, but revenue numbers “are pretty flat.” Tax data does not reveal information about transactions, so there is no way to fully comprehend how price declines affect the overall sales totals.
According to Light, it is tourism that is driving the sales of legal marijuana. Travelers visiting the state for a ski trip often stop by the dispensary for a small bag of weed, while some people come to the state specifically to buy cannabis to resell in other states where it is not legal.
However, the novelty of buying marijuana legally is slowly wearing off, as reported by the Denver Post. Statistics released by the Colorado Tourism Office showed a seven percent decrease in tourism in 2016 and researchers conclude visitors just aren’t that interested in buying weed as much anymore.
A 2015 survey by Indiana-based Strategic Marketing and Research Insight found seven percent of Colorado tourists planned to stop by a marijuana dispensary. The same survey taken in 2016 revealed the number dropped to just four percent. Data revealed by the research firm indicates people would rather visit Colorado’s other attractions, like national and state parks as well as various historical sites.
Colorado Tourism Office director Cathy Ritter said the state is being visited by “slightly older, more affluent” travelers who just aren’t spending any money in marijuana dispensaries. The average traveler to the state is aged 45 and spends about $1,400 during the stay.
“2016 represented a return to the more usual Colorado traveler,” Ritter noted.
Even though marijuana is classified as a Schedule I drug under federal law, the Obama administration looked the other way when it came to states legalizing marijuana. However, with a new, more conservative administration taking office, some in the industry are worried.
While there has been some rumbling about the future of legal marijuana after newly-appointed U.S. Attorney General Jeff Sessions said he would “review and evaluate” the past policy of staying away from the cannabis industry, it is really too early to know what is going to happen for sure. Should the Fed come in and dismantle the legalization of marijuana, it would certainly have a crippling effect on Colorado’s newest billion dollar industry.
[Featured Image by Kevork Djansezian/Getty Images]