Six years after Colorado legalized adult recreational use of cannabis and amidst the largest health and economic crisis in a century, the state’s cannabis industry is flourishing. June saw recreational marijuana shops sell more than $155 million worth of cannabis products, a 6% increase from the $149,186,615 worth of cannabis products sold in May. July was even more profitable with the state reporting $42 million in medical marijuana revenues and $164.2 million from recreational marijuana for total monthly sales of $206.7 million.
Colorado is representative of the entire country’s cannabis industry: it was declared essential at the start of the coronavirus pandemic and has weathered the storm surprisingly well. While most industries were affected by the resultant economic crisis, cannabis has consistently broken sales records month after month, providing states much-needed tax revenue. As the coronavirus started spreading, experts predicted that the worsening economy and reduced disposable income would push cannabis consumers to the illicit market.
Additionally, they predicted that recreational users would try to reduce their monthly spending by obtaining medical marijuana cards that would enable the purchase of similar cannabis products at a significantly lower sales tax rate. As a medical marijuana card can generally be obtained without much difficulty, this was entirely plausible. Based on data collected in the months since, it seems the market is indeed moving from recreational to medical use.
The medical market was seeing stunted growth before COVID-19 but recent sales data shows that trend is reversing. Benzinga reports that “since the pandemic, we note an uptick in cardholder counts coupled with a sharp increase in monthly spending. This trend could also suggest that existing cardholders are spending more for resale into the ‘gray market’ (purchased in the legal market, sold in the illicit market).”
Colorado boasts one of the country’s oldest and most stable cannabis industries and it may set a precedent for other states with legal cannabis programs. “As the bellwether for the U.S. cannabis industry, Colorado could be an indicator of similar trends experienced in other recreational use markets. Cannabis regulations and disclosures vary by state and with a 6-plus year experience of regulating a dual market, we think Colorado could serve as an indicator of similar trends experienced in other U.S. bifurcated markets.”
However, Benzinga notes that as the medical and recreational scenes coalesce into a single, larger market, the trend will fade with more growth coming from the recreational market. “With the imminent end of federal prohibition, we recognize that this shift could prove inconsequential as the medical (as defined today) and recreational use markets combine into one substantially larger market (medical use will be redefined and recalibrated with precise dosage, efficacy, etc. similar to other health/wellness products).”
These are interesting developments that sector players like Sugarmade, Inc. (OTCQB: SGMD) are most likely going to analyze carefully.
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
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