Colorado’s Legal Cannabis Market Grows Stronger

Colorado sold nearly twice as much recreational marijuana as it did medical cannabis last year. Data from the Colorado Department of Revenue shows that in 2017, the state sold 172,994 pounds of medical cannabis flower and 238,149 pounds of recreational flower. In 2018, it sold 147,863 pounds of medical and 288,292 pounds of recreational. Since 2014, when the state’s first retail stores opened, the number of pounds of recreational cannabis sold to consumers has increased by 646%.

The gap between medical and recreational sales isn’t surprising. Because marijuana is still illegal at the federal level, there has been very little research into how to harness the potential of medical marijuana. We know it can be used to treat a whole host of disorders, including epilepsy, autism, Parkinson’s disease, depression, anxiety, lack of appetite, multiple sclerosis and much, much more. But we still need to research how best to unlock marijuana’s potential. Once that happens, it’s entirely possible that medical marijuana sales will compete with, if not surpass, recreational marijuana sales.

To understand the big picture of Colorado’s successful marijuana market, we should note how the market has fared since legalization. Colorado legalized medical marijuana in 2000 and recreational marijuana in 2012. It’s brought in more than $1 billion in revenue since 2014. And it’s done $6.9 billion in total marijuana sales since January 2014.

Colorado was one of the first states to legalize recreational marijuana. And though the market isn’t as massive as California’s, for example, it’s been consistently lucrative. While legal marijuana markets in California still struggle to beat the black market, Colorado’s total monthly tax and fee revenues from marijuana sales have never dropped below $20 million.

And Colorado wants to continue strengthening its market. Gov. Jared Polis told CNBC, “We are always going to be relatively small potatoes on the actual sales… We are just not going to be as big as states like California or New Jersey… We want to make sure that 10 years from now, point-of-sales systems, chemistry, genetics – all those pieces – are housed here in Colorado with successful companies that power a multibillion-dollar national industry.”

Polis is smart to focus on making Colorado’s cannabis market a well-oiled machine – and potentially the national headquarters of the cannabis industry. This sector is just beginning to grow legs. And the opportunity for states to make money is only going to grow.

One more thing: The opportunity for cannabis startups is also enormous. Venture capitalists have sunk $1.2 billion into U.S. cannabis startups so far this year. And that money is also likely to keep growing.

Keep an eye out, investors.

Good investing,

Allison Brickell

Assistant Managing Editor, Early Investing

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