Why it matters: The article discusses the recent release of a monthly cannabis sales report in Colorado, which shows that adult-use and medical cannabis sales have surpassed $15 billion. However, the sales have been declining since the peak during the pandemic, raising concerns among analysts.
What they are saying: The data reveals that the oversupply of cannabis has led to lower prices and subsequently lower sales. Sales in Colorado reached $1-2 billion per year since 2016 but are expected to be even lower in 2023. The drop in sales is also seen in Denver, where annual cannabis sales revenue decreased by 22% from 2021 to 2022.
The big picture: The decline in cannabis sales in Colorado’s largest market, as well as the state as a whole, is raising concerns about the overall health of the cannabis industry. Factors such as oversupply, lack of demand, competition with neighboring legal states, and black market sales are contributing to this decline.
What to watch: It will be important to monitor if cannabis sales pick up in Q3 of 2023 to determine whether full-year sales will be higher or lower than 2022. Additionally, the potential rescheduling of cannabis from a Schedule I substance to a Schedule III substance at the federal level could have implications for the industry, including access to banking services and changes in tax regulations.
My take: The decline in cannabis sales in Colorado is a worrying trend for the industry. Oversupply and competition from neighboring states are likely contributing factors. Additionally, the potential for federal rescheduling of cannabis could provide some relief by addressing issues such as banking and tax regulations. However, it will be important for the industry to adapt and find new strategies to stimulate demand and sustain growth in the face of these challenges.
