Colorado Cannabis Market Spotlight
In 2014, Colorado made history as the first state to sell legal recreational cannabis. Once considered uncharted territory, the state has since established itself as a mature and thriving legal market.
And as various governments explore the possibilities of legalizing cannabis, policymakers likely see Colorado’s course as one to potentially emulate in order to achieve some of the same longer-term results that have materialized.
The following sponsored graphic from Tenacious Labs provides an in-depth analysis of the Colorado cannabis market and examines key trends and developments that have occurred over the past eight years.
Focus on sales and tax receipts
From a fiscal standpoint, the legalization of cannabis has been a success for the state of Colorado. Since its debut in 2014, Colorado has generated over $2 billion in tax and royalty revenue from the legal cannabis space.
Here’s a look at the growing tax revenue, which started from a modest $46 million and jumped nearly to 10x.
|Year||Tax revenue generated ($M)|
In addition, cannabis sales continue to increase. 2021 was a record year that generated $2.2 billion In income.
Given the increase in debt that most governments have incurred in response to the COVID-19 pandemic, new and increasing sources of revenue and taxation are attractive and can act as a key driver for legalization initiatives in other regions.
Cannabis use lights up
There are multiple converging factors that suggest that cannabis legalization can bring about a long list of benefits. Like sales and taxes, the employment sector has seen robust growth and is showing increasing signs of accelerating.
In Colorado, the industry has more than 40,000 jobs that contribute to the local economy, including those like “budtender”, which were almost non-existent a few years ago.
Similarly, the number of cannabis-related jobs across the country has increased from 122,000 in 2017 to 428,000 in 2022. In fact, in the United States, there are now more cannabis jobs than bank tellers, insurance agents and hairdressers.
But the growth should not stop yet. By 2025, some estimates indicate that there will be 1.5 million cannabis jobs as momentum for legalization continues to soar. In other words, the cannabis industry can represent 1% of the approximately 150 million employed people in America.
Innovation of new products
The high level of innovation in this space is fueling the growing numbers around the cannabis industry. Given the versatility of the cannabis plant, the modern industry now offers greater diversity and variety of products. And that can take the form of consumption methods ranging from inhalation like vaping and smoking, to edible beverages and baked goods.
Here’s how the market share of these products fared in 2020:
|Product||Market share (%)||Market value ($B)|
However, product innovation does not stop.
In 2020, a supplement 7,000 new products arrived on dispensary shelves compared to the previous year. With new products emerging every day, it’s quite possible that the future of cannabis could expand its total addressable market by attracting new consumers who might not resonate with today’s offerings.
Project funding and community impact
Where do the millions in annual cannabis tax revenue go? Since legalization, Colorado has produced a track record of positive and impactful initiatives it has funded with cannabis dollars.
Additionally, the state breaks down these revenues and shows how the funds are allocated.
|Breakdown of annual tax revenue||Revenue percentage|
|Marijuana Tax Fund||42%|
|Public Schools Capital Construction Assistance Fund||24%|
|Public Schools Fund||17%|
|Distribution of local governments||9%|
By far the largest portion of these funds goes to the Marijuana Tax Cash Fund. which supports an assortment of construction projects and law enforcement programs throughout the state.
Next is the Public Schools Capital Construction Assistance Fund, which receives almost a quarter of total taxpayer money. This fund helps provide much-needed capital to schools as they upgrade their facilities.
Overall, cannabis taxation has positive effects in many areas. For example, in recent years, $3 million went to opioid intervention, $16 million for affordable housing and $20 million for early literacy programs. As cannabis sales increase, funds from taxes are expected to follow, which only fuels larger and more frequent community programs and state initiatives.
Paving the way forward
In just under a decade, Colorado has demonstrated its ability to implement cannabis regulations that benefit stakeholders and society at large.
As tax revenues, jobs, product innovation and communities continue to thrive, many states and countries may seek to emulate these results and will look to Colorado’s history for guidance.
In the next part of The Legal Landscape Serieswe’re going to dive into a legal vs illegal overview of the cannabis markets.