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Colorado Cannabis Sales Over $2 Billion
Posted by Lori Ann Reese on 01/14/2021 in Colorado
Updated on May 13, 2021.
Medical content reviewed by Dr. Joseph Rosado, MD, M.B.A, Chief Medical Officer
Mid-way through January 2021, states may still be tabulating cannabis sales. To call 2020 a blockbuster year for medical and adult-use marijuana sales would be an understatement. The problems, political and pandemic stressors, helped drive sales to record-breaking levels in Colorado.
California was the first state to legalize medical marijuana in 1996. Then, Colorado legalized recreational cannabis in 2012. It took them sixteen years to move the legislative dial on adult-use. Washington also legalized in 2012. All three programs became the unofficial framework for other states.
The business and regulatory models, taxation and enforcement methods were an example of what worked. After 2012, with three state legalization examples to follow, other states escalated regulatory changes.
Propositions to legalize medical cannabis were made and rejected by state senates. The propositions were amended, voted on by lawmakers, and rejected again. This process continued until medical cannabis laws were passed. And in some cases, where state senates were deadlocked, it was put to a public vote. Where (unsurprisingly) citizens voted in favor of medical marijuana.
In the eight years that Colorado has successfully run a medical marijuana program, sales have grown exponentially. Colorado has also become a destination for cannabis tourism. Particularly in the early days when few states had legalized recreational weed.
The Colorado Department of Revenue announced total cannabis sales of $2,004,748,471 from January to November of 2020. The data from December sales will push that number higher. The DOR data reported $175.1 million in cannabis sales in November 2020.
Pandemic Proof Cannabis Industry Sustains High Growth
Economists and cannabis industry analysts were expecting 2020 to be a year of high growth. That was before the pandemic, however. No one was sure how American consumers would adjust spending on cannabis products for medicinal or recreational use.
In the early part of 2020, social distancing restrictions threatened to put a big dent in cannabis sales. In some states, adult-use or recreational dispensaries were required to close, along with other retail establishments. However, medical marijuana dispensaries were designated as “essential service” providers.
Founder and Executive Chairman of BDSA (a data firm) Roy Bingham reported that the American cannabis market grew by 45% in 2020. Total estimated sales nationwide (according to BDSA) were $18 billion. The marijuana market was initially forecast to reach $16 billion in 2020.
Medical dispensaries protected by the “essential service” designation were fast to adopt new touchless service models. The medical dispensaries rapidly moved to e-commerce and “herb side pick-up,” complying with health and safety requirements.
How Did Colorado Lawmakers Help Protect the State Cannabis Industry?
The Centers for Medicare & Medicaid Services (CMS) moved quickly to issue an unprecedented temporary regulatory waiver. The CMS realized that sending patients to clinics or doctor’s offices during a pandemic was counterintuitive to reducing infection rates. The interim rules allowed hospitals and practitioners to bill for remote services.
Once the CMS made the accommodation, states moved quickly to permit telehealth services. Colorado was one of the first states to adopt telemedicine as a temporary safety measure during the pandemic. On March 30th, 2020, the state Department of Health provided a list of healthcare services approved for telemedicine. And one of those services was medical marijuana health card evaluations.
The impact of offering telemedicine evaluations (required to get a Colorado medical card) was a factor that helped grow cannabis sales. Patients apprehensive about visiting a clinic or a medical office could complete the first step at home. Using a HIPAA compliant video portal, doctors could approve patients for medical cards.
If a resident had thought about getting a medical card, the process got a lot easier. With a qualifying health condition, they could complete the evaluation online. Then, the patient could finish the application process online as well. And have their Colorado medical card mailed to them.
Alternatively, paper applications could be processed by mail, with a six to eight week waiting period. Patients who process their application online with the Colorado Department of Public Health and Environment can receive approval within three days.
Colorado Sales Shift from Tourists to In-State Residents During Pandemic
The annual average income from tourism in the state of Colorado is $1.4 billion. However, economic losses due to the pandemic and lower traffic from tourism will impact that figure substantially. The numbers have not been reported yet for 2020.
Some have speculated that Colorado’s record-breaking cannabis sales were previously related to tourism. However, the drop in travelers visiting the state did not impact adult-use cannabis sales. The forecasted sales for both medical and adult-use cannabis were +$2 billion at the end of November 2020.
Medical marijuana sales in Colorado breached $405 million. The Colorado Department of Revenue has reported that 80% of cannabis sales were to residents of the state, not visitors. Approximately 80% of the sales of marijuana in Colorado in 2020 were for recreational use.
With no sign of slowing demand from residents, Colorado prices for cannabis are going up as well. Wholesale prices for cannabis in Colorado reached a four-year high at $1,721 per pound. This is according to a report by Westworld (Denver).
The price increase reflects the explosive demand for cannabis in Colorado, as cultivators struggle to produce sufficient quantities. Prices for marijuana trim have also increased by 12.5% (July to December 2020) to $400 per pound. Cannabis trim (used for concentrates and production of edibles) increased 30% to $250 per pound as well.
Are Record-Breaking Cannabis Sales in Colorado Sustainable?
As the pandemic’s duration extends, the demand for cannabis in Colorado is expected to be strong. However, some analysts speculate that sales will eventually plateau. Economic constraints may increase the popularity of home-grow for consumers in the state in 2021.
If demand continues to exceed the supply of cannabis in Colorado, it will have an inflationary effect on retail prices at dispensaries. Anyone over the age of 21 years in Colorado can grow up to six total plants, with three plants flowering at one time.
However, household limits vary by municipal law. For example, in Denver, there is a maximum number of twelve plants per dwelling. Regardless of how many residents live within the home. But purchasing cannabis from a dispensary is about to get more comfortable in Colorado.
Aurora, Colorado, is the first city in the state to legalize recreational cannabis delivery. It has chosen a company called Lantern (a subsidiary of Drizly Group) to license for home delivery of marijuana products. If the services are quickly licensed in other cities, Colorado may continue to dominate cannabis sales in 2021.
In the era of social distancing, ordering cannabis for home delivery may be the ticket that keeps Colorado in the green for fiscal 2021.
Featured Image: Evgeniy Bobkov | Deposit Photostock