{"id":9659,"date":"2023-05-21T12:21:05","date_gmt":"2023-05-21T12:21:05","guid":{"rendered":"https:\/\/www.denverpost.com\/?p=5657749"},"modified":"2023-05-21T12:21:05","modified_gmt":"2023-05-21T12:21:05","slug":"colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold\/","title":{"rendered":"Colorado\u2019s cannabis industry has fallen on hard times. What does the future hold?"},"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-has-fallen-on-hard-times-what-does-the-future-hold\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div class=\"media_block\"><\/div>\n<p>The heyday of marijuana sales in Colorado \u2014 back in 2020 when recreational and medical sales topped out at a combined $226 million \u2014 is a distant memory, as the state\u2019s dispensaries struggle through an economic downturn, with sales plummeting and small businesses foundering.<\/p>\n<p>\u201cThe market\u2019s just bad. It\u2019s bad right now,\u201d said 29-year-old Val Tonazzi, who works in cannabis sales. \u201cThere\u2019s businesses closing, left and right.\u201d<\/p>\n<p>In March, Colorado\u2019s <a href=\"https:\/\/cdor.colorado.gov\/data-and-reports\/marijuana-data\/marijuana-sales-reports\" target=\"_blank\" rel=\"noopener\">total medical marijuana sales<\/a> were about $17 million \u2014 around $5 million less than last March. Retail marijuana sales racked up to $122 million, but that\u2019s still a $17 million drop from March 2022.<\/p>\n<p>It\u2019s an improved outlook from February when medical marijuana sales dipped to their lowest point since retail sales began \u2014 around $15 million. And sales for both recreational and medical weed totaled to over $139 million, which is the highest it\u2019s climbed to since last October.<\/p>\n<p>But times have changed since the COVID-19 pandemic \u2014 <a href=\"https:\/\/www.hhs.gov\/about\/news\/2023\/05\/09\/fact-sheet-end-of-the-covid-19-public-health-emergency.html\" target=\"_blank\" rel=\"noopener\">now officially over<\/a> \u2014 which gave the cannabis industry a boost as customers stocked up on edibles and joints to enjoy under lockdown.<\/p>\n<p>Instead, in 2023, Colorado\u2019s cannabis entrepreneurs face a perfect storm of problems: too much supply, not enough demand, plunging prices, heightened competition in other states, the allure of black market weed, a lack of cannabis tourism and more. That\u2019s on top of the shaky economic forecast for the rest of the year, even though <a href=\"https:\/\/www.denverpost.com\/2023\/05\/10\/4-things-to-know-about-wednesdays-inflation-report\/\" target=\"_blank\" rel=\"noopener\">inflation is steadily slowing<\/a>.<\/p>\n<figure id=\"attachment_5200852\" class=\"wp-caption aligncenter size-article_inline\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold.jpg\" alt=\"Calie Clark smokes cannabis from a ...\" width=\"3000\" data-sizes=\"auto\" data-src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold.jpg\" data-srcset=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold.jpg 620w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2022\/05\/TDP-Z-imadalii-jads-mile-high-smoke-7.jpg?fit=780%2C9999px&amp;ssl=1 780w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2022\/05\/TDP-Z-imadalii-jads-mile-high-smoke-7.jpg?fit=810%2C9999px&amp;ssl=1 810w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2022\/05\/TDP-Z-imadalii-jads-mile-high-smoke-7.jpg?fit=1280%2C9999px&amp;ssl=1 1280w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2022\/05\/TDP-Z-imadalii-jads-mile-high-smoke-7.jpg?fit=1860%2C9999px&amp;ssl=1 1860w\" \/><figcaption class=\"wp-caption-text\">Calie Clark smokes cannabis from a bong with her husband, left in glasses, and friends at JAD\u2019s Mile High Smoke, the first cannabis lounge in the state, in Denver on Friday, April 29, 2022. (Photo by Eli Imadali\/Special to The Denver Post)<\/figcaption><\/figure>\n<p>In recent years, several of Colorado\u2019s neighbors have legalized <a href=\"https:\/\/mjbizdaily.com\/map-of-us-marijuana-legalization-by-state\/\" target=\"_blank\" rel=\"noopener\">recreational marijuana<\/a>, including New Mexico in 2021, Montana in 2020 and Arizona that same year.<\/p>\n<p>With weed sales plummeting, career opportunities in the industry are growing scarce. Colorado ranked as the No. 2 state for <a href=\"https:\/\/d2vuw3vodfugo8.cloudfront.net\/vangst-jobs-report-2023.pdf?Expires=1684279492&amp;Signature=fR-aLK5z-PoZX1GCgZ~bq5ffOU52WBmE8-nzFtQZ8dwS~5WYr9an7iHXIThGnh67DJreUyKqhsx5sb0oUOCTPOYGoudTOOB1rybudZYDtCdhm1S1J~C9-soMgqOWnVuCMWREqCsiBqIPNBDusHrmm-uN8DIrRZL-wu8wdvlHilxuIcDk8qUly1~afZiI9eNnW4BaIFimITOpSpOW-hxf26orPO~6tAP3Qi5KswW4qj4n-2Ij1CeoKE-Eus6lQvecyiPP-3-52xFd7ZS185YOsTvzZlxCSJ0gEsZhGdDOnv~4d1RLX5yUt5pSCmp02X6q8XgQo4swQ0w31A-VK9iESg__&amp;Key-Pair-Id=K2C81O1BS6D3LH\" target=\"_blank\" rel=\"noopener\">cannabis job losses<\/a> in the past year, with more than 10,000 eliminated, according to the Vangst Jobs Report.<\/p>\n<p>As of February, Colorado only occupied the No. 6 spot on the list of America\u2019s top cannabis job markets, with almost 28,000 related positions. It fell behind California, Michigan, Illinois, Florida and Massachusetts.<\/p>\n<p>Earlier this year, marijuana giant <a href=\"https:\/\/ir.curaleaf.com\/2023-01-26-Curaleaf-Announces-Closure-of-Operations-in-California,-Colorado-and-Oregon#:~:text=Curaleaf%20Announces%20Closure%20of%20Operations,and%20Oregon%20%2D%20Jan%2026%2C%202023\" target=\"_blank\" rel=\"noopener\">Curaleaf<\/a> shuttered its operations in Colorado, along with California and Oregon. \u201cWe believe these states will represent opportunities in the future, but the current price compression caused by a lack of meaningful enforcement of the illicit market prevent us from generating an acceptable return on our investments,\u201d CEO Matt Darin said.<\/p>\n<p>Nationwide, the marijuana industry\u2019s <a href=\"https:\/\/cdn.nar.realtor\/\/sites\/default\/files\/documents\/2023-marijuana-and-real-estate-a-budding-issue-04-19-2023.pdf\" target=\"_blank\" rel=\"noopener\">share of real estate acquisitions<\/a> is taking a hit. Realtors \u201care seeing a decline in commercial property purchases by marijuana industry-related businesses and a corresponding increase in leasing activity,\u201d the National Association of Realtors reported.<\/p>\n<figure id=\"attachment_5671040\" class=\"wp-caption alignnone size-article_inline\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-1.jpg\" \/><figcaption class=\"wp-caption-text\">Renee Grossman, owner of High Q, in her Carbondale location on Thursday, May 18, 2023. \u201cThis industry right now has too much of everything,\u201d explained Grossman. \u201cThere\u2019s too much marijuana, too much product, and it just has to rationalize.\u201d (Kelsey Brunner\/Special to The Denver Post)<\/figcaption><\/figure>\n<p>And business owners of smaller chains, like Ren\u00e9e Grossman, find themselves especially at risk. In 2013, she founded <a href=\"https:\/\/highqrockies.com\/\" target=\"_blank\" rel=\"noopener\">High Q<\/a>: five retail stores in the Colorado mountain towns of Silt, Carbondale, Snowmass Village, Parachute and Cedaredge.<\/p>\n<p>Eventually, she merged the businesses into Hava Companies, and expanded into cultivation and manufacturing in 2020. Now, Grossman is watching the state\u2019s industry grapple with an oversupply, softening demand and lack of capital.<\/p>\n<p>\u201cThere\u2019s too many stores, there\u2019s too much cultivation, there\u2019s too many products,\u201d she said in a phone interview. \u201cRight now, all the investors are sitting on the sidelines, and kind of waiting to time the bottom \u2014 and nobody knows exactly when that\u2019s going to happen.\u201d<\/p>\n<p>As she and other entrepreneurs have tried to weather the storm, Grossman was forced to move forward with a significant round of layoffs last year. She said other businesses in \u201ccash crunches\u201d can\u2019t pay their bills.<\/p>\n<p>\u201cMost companies I know are losing money, or they\u2019ve shut down and scaled back,\u201d she said. \u201cA lot of companies that are my size or smaller are really feeling the burn.\u201d<\/p>\n<p>Grossman anticipates that mergers may eventually need to take place, \u201cso we can compete more effectively with the larger chains.\u201d<\/p>\n<figure id=\"attachment_5569930\" class=\"wp-caption aligncenter size-article_inline\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-2.jpg\" width=\"4808\" data-sizes=\"auto\" data-src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-2.jpg\" data-srcset=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-2.jpg 620w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/02\/TDP-L-20141205_TOURISMDSC_7748x.jpg?fit=780%2C9999px&amp;ssl=1 780w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/02\/TDP-L-20141205_TOURISMDSC_7748x.jpg?fit=810%2C9999px&amp;ssl=1 810w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/02\/TDP-L-20141205_TOURISMDSC_7748x.jpg?fit=1280%2C9999px&amp;ssl=1 1280w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/02\/TDP-L-20141205_TOURISMDSC_7748x.jpg?fit=1860%2C9999px&amp;ssl=1 1860w\" \/><figcaption class=\"wp-caption-text\">Beth Bice of Charlotte, N.C., smokes a joint on the bus during a marijuana tour hosted by My 420 Tours in Denver on Dec. 6, 2014. Bice saw a video advertising the tours and said, \u201clets go to Colorado.\u201d During the day, tourists visited La Conte\u2019s grow facility, La Conte\u2019s Clone Bar &amp; Dispensary, Native Roots dispensary and Illuzions Glass Gallery. (Photo By Craig F. Walker \/ The Denver Post)<\/figcaption><\/figure>\n<h4>Big marijuana brands<\/h4>\n<p>Even some of the big players in Colorado\u2019s cannabis industry aren\u2019t immune to the changing tides.<\/p>\n<p>As Americans brace for a potential recession this year, \u201cthe general public is pinching pennies, and we\u2019ve seen it firsthand,\u201d said Buck Dutton, vice president of marketing at Native Roots Cannabis Company.<\/p>\n<p>For example, performance in April \u2014 a traditionally strong month for cannabis, according to Dutton \u2014 fell flat.<\/p>\n<p>As Colorado contends with new legal markets in other states, \u201cpeople don\u2019t see the need to travel here to spend their 4\/20 with us,\u201d he said. \u201cThe only expectation that it lived up to is that we thought it was going to be bad.\u201d<\/p>\n<p>At Native Roots, he described the average basket order as down, with customers buying fewer products and visiting less often.<\/p>\n<p>Not only is the company operating in a decline, but the state is as well, Dutton said. That\u2019s leading them both to rightsize, particularly due to Colorado\u2019s once-\u201coversaturated\u201d market.<\/p>\n<figure id=\"attachment_5604056\" class=\"wp-caption aligncenter size-article_inline\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-3.jpg\" alt=\"Packaged cannabis is ready for the upcoming opening of Verts Neighborhood Dispensary in Golden on Tuesday, March 28, 2023. (Photo by Hyoung Chang\/The Denver Post)\" width=\"8256\" data-sizes=\"auto\" data-src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-3.jpg\" data-srcset=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-3.jpg 620w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/03\/TDP-L-VertsNeighborhood032823-cha-249.jpg?fit=780%2C9999px&amp;ssl=1 780w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/03\/TDP-L-VertsNeighborhood032823-cha-249.jpg?fit=810%2C9999px&amp;ssl=1 810w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/03\/TDP-L-VertsNeighborhood032823-cha-249.jpg?fit=1280%2C9999px&amp;ssl=1 1280w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2023\/03\/TDP-L-VertsNeighborhood032823-cha-249.jpg?fit=1860%2C9999px&amp;ssl=1 1860w\" \/><figcaption class=\"wp-caption-text\">Packaged cannabis is ready for the upcoming opening of Verts Neighborhood Dispensary in Golden on Tuesday, March 28, 2023. (Photo by Hyoung Chang\/The Denver Post)<\/figcaption><\/figure>\n<p>Meanwhile, edibles company Wana Brands is running business as usual, with expansions set in new states and no layoffs, said chief marketing officer Joe Hodas. He largely attributes that to the company never taking on debt or outside investment.<\/p>\n<p>But the broader Colorado market is facing problems right now because it\u2019s competing within three separate industries, Hodas said. The first is the regulated marijuana industry and its issue of price compression, while the second is the black market, which doesn\u2019t tax consumers.<\/p>\n<p>Finally, there\u2019s the gray market, which consists of hemp products, along with Delta-8 and Delta-9 products \u2014 unregulated, hemp-derived cannabinoids.<\/p>\n<p>A <a href=\"https:\/\/leg.colorado.gov\/bills\/sb23-271\" target=\"_blank\" rel=\"noopener\">measure<\/a> heading to the governor\u2019s desk would empower the regulation of intoxicating hemp-derived products in the Colorado market, with Chuck Smith of cannabis business alliance Colorado Leads calling it a \u201cmajor policy issue that many states will be grappling with for years to come.\u201d<\/p>\n<p>Hodas acknowledged the bill as \u201ca good step in the right direction, but we\u2019re still competing with Delta-8 and Delta-9 products.\u201d<\/p>\n<figure id=\"attachment_3835990\" class=\"wp-caption aligncenter size-article_inline\"><img class=\"lazyautosizes lazyload\" src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-4.jpg\" alt=\"Matt Eidson, cultivation technician at Fat Face Farms cultivation facility, checks on marijuana plants in the vegetative room in Denver on Jan. 14, 2020. At the time, prices had hit a 3-year high, but sales across the state have dropped since. (Photo by Helen H. Richardson\/The Denver Post)\" width=\"4176\" data-sizes=\"auto\" data-src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-4.jpg\" data-srcset=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2023\/05\/colorados-cannabis-industry-has-fallen-on-hard-times-what-does-the-future-hold-4.jpg 620w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2020\/01\/TDP-L-FAT_FACE_FARMS__HHR0908.jpg?fit=780%2C9999px&amp;ssl=1 780w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2020\/01\/TDP-L-FAT_FACE_FARMS__HHR0908.jpg?fit=810%2C9999px&amp;ssl=1 810w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2020\/01\/TDP-L-FAT_FACE_FARMS__HHR0908.jpg?fit=1280%2C9999px&amp;ssl=1 1280w,https:\/\/i0.wp.com\/www.denverpost.com\/wp-content\/uploads\/2020\/01\/TDP-L-FAT_FACE_FARMS__HHR0908.jpg?fit=1860%2C9999px&amp;ssl=1 1860w\" \/><figcaption class=\"wp-caption-text\">Matt Eidson, cultivation technician at Fat Face Farms cultivation facility, checks on marijuana plants in the vegetative room in Denver on Jan. 14, 2020. At the time, prices had hit a 3-year high, but sales across the state have dropped since. (Photo by Helen H. Richardson\/The Denver Post)<\/figcaption><\/figure>\n<h4>\u201cColorado is the ghost of Christmas future\u201d<\/h4>\n<p>In Denver, Excise and Licenses Executive Director Molly Duplechian pointed to another potential problem.<\/p>\n<p>The agency, which regulates Colorado\u2019s largest cannabis market in terms of stores, is \u201cworking hard to educate the industry on the importance of our safe storage rules for product and cash to be in a locked safe overnight to reduce opportunities for burglaries, which can be especially devastating to smaller operators.\u201d<\/p>\n<p>The city is home to <a href=\"https:\/\/denvergov.org\/Government\/Agencies-Departments-Offices\/Agencies-Departments-Offices-Directory\/Business-Licensing\/Business-licenses\/Marijuana-licenses\" target=\"_blank\" rel=\"noopener\">319 stores<\/a>, as of Wednesday.<\/p>\n<p>For Truman Bradley, executive director of the Marijuana Industry Group, \u201cColorado is the ghost of Christmas future.\u201d<\/p>\n<p>When cannabis is first legalized in a state, it starts with a boom, with demand initially outweighing supply, he said in a phone interview. As the market matures, then equilibrium is reached.<\/p>\n<p>But unlike other industries, cannabis businesses can\u2019t find more customers for their products by selling across state lines. \u201cThe only way that we can survive is to get leaner,\u201d with some of them ultimately shuttering for good, Bradley said.<\/p>\n<p>In a message to Colorado legislators, Bradley said, \u201cIt\u2019s critical that lawmakers understand that decade No. 2 of legalization needs to look fundamentally different from decade No. 1.\u201d<\/p>\n<p>On the federal level, nationwide legalization could remedy some of these challenges by easing hefty tax burdens, he added.<\/p>\n<p>Bradley sees a bright spot for the industry: the consumers. And some of them aren\u2019t immediately jarred by the trouble facing the marijuana industry.<\/p>\n<p>\u201cI just know weed is cheap right now \u2014 like, really cheap,\u201d said 23-year-old Caroline Smith, whose favorite dispensary is Golden Meds. Even with the unpredictability of the economy, \u201cI\u2019d buy it either way.\u201d<\/p>\n<p><em><a href=\"https:\/\/www.denverpost.com\/newsletters\">Want to get the latest marijuana news from around the country? Sign up for The Cannabist, our weekly newsletter, now.<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<div class=\"media_block\"><\/div>\n<p>The heyday of marijuana sales in Colorado &#8212; back in 2020 when recreational and medical sales topped out at a combined $226 million \u2014 is a distant memory, as the state&#8217;s dispensaries struggle through an economic downturn, with sales plummeting and small businesses foundering. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[7636,5062,52,8272,1547,2383,9687,7938,77,5577,6815,6858,9,6882,5019,1,3,61,1736],"tags":[7639,5063,2632,8273,4115,4947,9688,7939,2655,5580,6820,6860,6883,5022],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/9659"}],"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=9659"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/9659\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=9659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=9659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=9659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}