{"id":9522,"date":"2022-06-28T12:46:56","date_gmt":"2022-06-28T12:46:56","guid":{"rendered":"https:\/\/www.denverpost.com\/?p=5281196"},"modified":"2022-06-28T12:46:56","modified_gmt":"2022-06-28T12:46:56","slug":"colorados-cannabis-industry-prepares-for-tough-times-as-u-s-recession-looms","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/colorados-cannabis-industry-prepares-for-tough-times-as-u-s-recession-looms\/","title":{"rendered":"Colorado\u2019s cannabis industry prepares for tough times as U.S. recession looms"},"content":{"rendered":"<div id=\"wp_fb_like_button\" style=\"margin:5px 0 5px 5px;float:right;height:100px;\"><script src=\"http:\/\/connect.facebook.net\/en_US\/all.js#xfbml=1\"><\/script><fb:like href=\"https:\/\/cannitrol.com\/blog\/colorados-cannabis-industry-prepares-for-tough-times-as-u-s-recession-looms\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div class=\"media_block\"><\/div>\n<div><img src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2022\/06\/colorados-cannabis-industry-prepares-for-tough-times-as-u-s-recession-looms.jpg\" class=\"ff-og-image-inserted\" \/><\/div>\n<p>Colorado\u2019s cannabis industry is preparing for tough times as marijuana sales drop and economic problems pile up.<\/p>\n<p>During the COVID-19 pandemic lockdowns, weed businesses serviced consumers eager to stock up on their favorite edibles, concentrates and pre-rolls. That high has since given way to a low for the industry, as less consumer spending means sales are falling in both the recreational and medical markets, according to <a href=\"https:\/\/www.headset.io\/about\">Headset<\/a>, which provides insights into cannabis consumer trends.<\/p>\n<p>In Colorado, total sales for marijuana stood at $153 million in April \u2013 a 26% decrease compared to about $206 million sold that month last year, according to the Marijuana Industry Group, the trade association for the state\u2019s cannabis industry. Medical sales specifically took a hit, plunging to about $20 million in April from almost $40 million last April.<\/p>\n<p>On top of that, the cannabis industry has to contend with the looming U.S. recession, hurdles around profitability, supply-chain problems and weakening flower prices. And the downward spiral isn\u2019t restricted to Colorado businesses \u2014 it\u2019s a nationwide challenge, said Aaron Smith, CEO of the National Cannabis Industry Association.<\/p>\n<p>\u201cObviously, the inflation factor is happening everywhere,\u201d he said, pointing to some cannabis users who are \u201cprobably cutting down on consumption because they\u2019re having a hard time making ends meet or paying their bills.\u201d<\/p>\n<p>\u201cThat\u2019s a problem that\u2019s much deeper than cannabis,\u201d Smith added. However, he sees a silver lining in the situation: the industry\u2019s longevity.<\/p>\n<p>\u201cI don\u2019t have a crystal ball,\u201d he said, but \u201cI don\u2019t see the legal cannabis market going away by any means.\u201d<\/p>\n<p>This year, the U.S. cannabis market is worth more than $30 billion, and the cannabis tourism industry is valued at around $17 billion, Headset reported. In Colorado, median store sales amount to about $2 million, with Millennial men counting as the state\u2019s biggest spenders on cannabis.<\/p>\n<p>However, Marijuana Industry Group\u2019s Truman Bradley said he\u2019s seeing \u201can industry on the edge,\u201d with regulations and taxes hurting the state\u2019s marijuana businesses.<\/p>\n<p>\u201cOur industry is subject to more than a 70% effective tax rate, and no other industry faces that,\u201d he said.<\/p>\n<p>Bradley highlighted <a href=\"https:\/\/leg.colorado.gov\/bills\/hb21-1317\">House Bill 1317<\/a>, which imposed more requirements on medical marijuana patients and curbed the amount of concentrate that a patient can buy in one day to eight grams. For 18- to 20-year-olds, the limit became two grams.<\/p>\n<p>Alec Garnett, the Colorado House of Representatives\u2019 Speaker and the bill\u2019s main architect, defended it, saying it aimed to reduce the amount of high-potency concentrate that\u2019s showing up on high school campuses.<\/p>\n<p>\u201cOver 85% of the legislature voted in support of the legislation,\u201d Garnett said. \u201cA lot of other states are looking to what we did to make sure young people with a developing brain don\u2019t have unfettered access to high-potency products.\u201d<\/p>\n<p>For Bradley, there could be more changes on the horizon. He pointed to a potential ballot measure aiming to hike total taxes on recreational weed sales up to more than 30% in Denver. \u201cMy members are deeply concerned,\u201d he said. \u201cWe\u2019re staring down the barrel of real layoffs and closing doors.\u201d<\/p>\n<p>Buddy Boy Brands\u2019 seven metro-area dispensaries shuttered their doors permanently this month, with owner John Fritzel owing \u201ca tax balance\u201d and blaming a market downturn.<\/p>\n<p>Paul Seaborn, assistant professor at the University of Virginia, said the squeeze on Colorado\u2019s industry and other states with mature cannabis markets is because of a combination of factors, including sales leveling out after the COVID-19 spike, sliding prices, increased competition for customers and lower rates of cannabis tourism.<\/p>\n<p>Liz Zukowski, policy and public affairs manager at Native Roots Cannabis Co., said her company \u201cis not immune\u201d to the macroeconomic forces impacting the industry, but the team is leaning into its strengths, such as its vertical integration in handling everything from production to sales, to combat those factors.<\/p>\n<p>Native Roots started in 2010 as a medical cultivator and extractor in Boulder. Now, it includes 20 retail locations statewide and two Denver production facilities, with almost 500 employees.<\/p>\n<aside class=\"related right\">\n<\/aside>\n<p>Zukowski highlighted an industry trend that she considers problematic in the long run. \u201cDispensaries are trying to compete with each other, and they\u2019re racing to the bottom to discount products, so that people are continuing to purchase,\u201d she said in a telephone interview.<\/p>\n<p>She\u2019s also noticed fewer medical patients walking through the doors of Native Roots, crediting that to House Bill 1317.<\/p>\n<p>\u201cThis industry is not flushed with cash. We do operate on cash, but our margins are so razor-thin,\u201d she said. \u201cThere isn\u2019t a whole lot of extra money to get thrown around,\u201d so policy changes result in a rippling effect on businesses.<\/p>\n<p>On the other hand, Green Dragon, which was founded in Colorado in 2012, has \u201cnot seen much of a change to our sales,\u201d said cofounder Alex Levine, although he acknowledged that the industry as a whole seems to be experiencing a downward trend.<\/p>\n<p>Green Dragon consists of 16 Colorado locations and seven Florida locations, with plans to rapidly expand in the latter. Across both states, the company employs more than 300 people.<\/p>\n<p>\u201cConsumers across the board are cutting back on retail spending due to inflationary pressures and reduced disposal income,\u201d said Levine in an emailed statement. \u201cHowever, we are offering everyday low prices and enticing promotions that continue to draw customers in.\u201d<\/p>\n<p>He anticipates a boost in sales in the future.<\/p>\n","protected":false},"excerpt":{"rendered":"<div class=\"media_block\"><\/div>\n<p>Colorado&#8217;s cannabis industry is preparing for tough times as marijuana sales drop and economic problems pile up. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5062,52,8387,1547,7938,77,5577,6815,6858,6822,6921,9,6882,7036,5019,6845,1,3,61,1736],"tags":[5063,2632,8389,4115,7939,2655,5580,6820,6860,6824,6922,6883,7037,5022,6846],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/9522"}],"collection":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/comments?post=9522"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/9522\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=9522"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=9522"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=9522"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}