NEW YORK (MainStreet) On every front, the Colorado cannabis market has continued to fly high in its first year of legalization for all. The state just released its April numbers which confirm the same.
The overwhelming trend so far, although industry watchers all say this is an anomaly based on the early stage of the market, is that from the state's perspective at least, revenue from medicinal sales taxes and license fees are still dramatically higher in sum than those collected from the recreational market. This is even more significant considering that medical marijuana is taxed at a far lower rate than those catering to recreational users. That said, as the medicinal market has remained relatively steady, the recreational market revenue has steadily climbed higher every month since the beginning of the year. State revenues from recreational use are dramatically up month over month, growing from just over $416,000 in January to $639,000 in April.
According to Natriece Bryant, communications specialist for the State of Colorado Department of Revenue, "In the short time that the sale of recreational marijuana has been legal, we have not seen a large migration of the market from medical marijuana businesses to recreational businesses."
Bryant noted that there are several reasons for the discrepancy of state revenue collected to date that have nothing to do with anything but regulatory mandate.
"There are many jurisdictions that allow for medical marijuana businesses, but not recreational marijuana business," she said. "And in addition, [Colorado law] allows local jurisdictions to limit the number of recreational marijuana businesses in their jurisdictions."
Bryant also noted that as of this interview, the number of medical dispensaries far outnumber recreational shops. "There are 500 licensed medical marijuana centers and 200 licensed recreational marijuana businesses in Colorado," she said.
That is a sentiment also echoed by Justin Hartfield, founder of Weedmaps, although he gives a slightly different shade to this interpretation.
"Recreational will be bigger than medical" he says, "but tax issues are holding people back from switching. They are just holding onto their [medical use] cards."
Also See: Weedmaps Grows into the Big Leagues
The sentiment across the industry, from cannabis businesses to the advocacy community, is of one voice. The consensus is that the market is too young to gain further insight beyond acknowledging the huge demand for recreational products as the market emerges from the long era of prohibition.
That said, there is also widespread agreement that Colorado is emerging as a fascinating lab if not snapshot of where the market is going.
According to Ata Gonzalez, CEO of GFarmaLabs, Colorado will clearly be the market leader to watch for emerging industry trends.
"Medical marijuana has never been fully regulated in any region other then Colorado," he told MainStreet. He also noted that the medical market set up an infrastructure for industry expansion.
"Now we are seeing Colorado go from a medical state to an adult use market and the prior regulations that were put in place for medical made entering into the adult market in that state extremely easy for those already licensed," Gonzalez said. "Regulations there are a model for the rest of the nation."
Also See: Colorado's Cannabis Banking Bill Makes National Financial History
Rachel Gillette, the executive director of the Colorado branch of the National Organization for the Reform of Marijuana Laws (NORML) concurs.
"Now that sales are emerging from what has always been a black market for recreational sales, we are able to tally, with real sales tax revenue numbers, the true demand for recreational marijuana- a demand that has always arguably been greater than the demand for medical marijuana," she said.
So while the monthly state revenue numbers to date confirm a huge and steady medical user base, worth on average just under a million dollars to the state every month in terms of collected tax revenue, it is the recreational market that everyone is watching.
Not only have sales increased dramatically just in the last two months, but it is clearly a market that has not even begun to establish a set monthly revenue average much less saturation point.
--Written by Marguerite Arnold for MainStreet