Southwest Update: Colorado

Colorado cannabis businesses have sold approximately $15.5 billion in cannabis products in the past decade with annual sales hitting an all-time high of $2.2 billion in 2021. But sales have slowed considerably since that highpoint, dropping to $1.768 billion in 2022 and then $1.529 billion in 2023. The sharp decrease in sales is attributable to numerous factors, but it has led to a sizable number of operators, particularly cultivators, leaving the market.

A dramatic drop

Colorado’s cannabis sales soared during the first two years of the pandemic, reaching an all-time high of more than $2.2 billion for 2021. But the following year sales dropped by more than 20%. By the end of 2023, annual sales had decreased by nearly $700 million, a 31% drop in just two years.

“It’s not a rosy picture for Colorado marijuana right now,” Bradley says. “I think a lot of people are barely holding on right now. I think the COVID federal ERC money is what’s keeping people afloat right now, and that’s going to come to an end pretty soon.”

Bradley says there are myriad reasons for declining sales, including inflation, the high cost of operating a compliant cannabis business, the legalization of cannabis in other state markets which has decreased sales to out-of-state residents, the rise of hemp-derived intoxicating products and legislation that removed the telemedicine component from the state’s medical cannabis program. All of those issues were in addition to the state seeing record harvests in 2022 and 2023, which has led to an oversupply problem and lower prices at retail, Bradley says.

Exiting the industry

Bradley says Colorado has lost 10,000-plant-touching jobs in the past year.

“That’s one quarter of the workforce,” he says. “Many producers have walked away from their cultivation licenses.”

According to state data, there are 607 recreational producers in the state, 188 fewer than there were at the beginning of 2022. Bradley says several were in the lowest tier of cultivation (5,000 square feet) that simply couldn’t compete under the current market conditions. There were also much larger cultivators that exited, including Curaleaf, which acquired the state’s largest producer, Los Sueños, in October 2021, only to sell the 36-acre operation and exit the state completely in January 2024.

Edibles manufacturers Coda Signature and 1906 have also exited the state market, along with several of the state’s longtime retail, processing and cultivation operators.

Guarded optimism

Despite all the hardships Colorado operators have endured in recent years, there are still signs for what Bradley calls “guarded optimism.”

“Many producers have right-sized their cultivations, which included walking away from hundreds of cultivation licenses,” he says. “Another sign for optimism in the state is the limited number of municipalities recognizing the challenges facing the regulated industry and undertaking steps to streamline regulations and provide some regulatory relief.”