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Luke Conway talks about the products sold Friday at Culling Kind, 5854 Rawhide Court in Boulder. Culling Kind was the first store to open for retail marijuana sales in Boulder County 10 years ago. Cliff Grasmick/Staff Photographer)
Culling Kind, Boulder County’s first marijuana dispensary, opened for recreational sales on February 18, 2014, and business was booming when recreational marijuana was legalized in Colorado.
After 10 years, the grass is not so green.
Founding owner Dylan Donaldson said, “In the beginning it was great with a lot of tourists, but now that other states have reopened, the market has definitely declined.” “We’re just doing our best to accommodate all of this and serve our wonderful, loyal customers.”
Donaldson said he is proud that his business, which first opened for medical purposes north of Boulder in 2009, is stable and has survived this long.
But that’s not the case for other cannabis business owners in Colorado.
“We see the industry on the brink,” said Truman Bradley, executive director of the Marijuana Industry Group. “If the situation does not change, small and medium-sized enterprises will continue to go out of business.”
MIG is the industry association for regulated cannabis businesses in Colorado. Founded in 2010, MIG is one of the first states to legalize recreational marijuana in Colorado and works with legislators to ensure that legalization is smooth and compliant.
The marijuana industry is struggling right now, Bradley said.
“Colorado businesses really suffer from over-regulation and grossly unfair federal tax rates. And I have to say, in some ways, we are victims of our own success.” Mr. Bradley said. “People don’t come to Colorado for cannabis tourism anymore because recreational cannabis is legal in almost every major city in the country, except for Florida and Texas.”
Although many states have allowed recreational marijuana, marijuana is still classified as a Schedule I drug in the eyes of the U.S. Drug Enforcement Administration, along with heroin, ecstasy, and other substances with a high potential for abuse. .
But Adam Goers, senior vice president of corporate affairs for the Cannabist Company, parent company of Medicine Man in Longmont, said he and his colleagues are “incredibly optimistic that change is coming.” .
“70% of Americans support legalization,” Goers said, citing Gallup polling data. “We know it’s not a matter of if, but when…Change will happen.”
Even at the local level, the cannabis industry faces rules and regulations that other businesses don’t, such as Longmont’s four-store limit for dispensaries.
Boulder has no cap on marijuana licenses, but it does have a density limit of three cannabis businesses within 500 feet.
A decade after legalization, some towns and cities in Colorado still don’t even allow recreational marijuana sales within their jurisdictions. In Boulder County, the Town of Erie still does not allow retail marijuana sales, but Superior just recently voted to allow two stores.
Still, the variety of products cannabis companies offer their customers has continued to grow and flourish over the years, from low-dose edibles to smokable cannabis.
“We have a huge variety of products, including ingestible products,[inhalable items]like vaporizers, balms and transdermal patches, with very precise dosing,” Goers said. said. “The pharmacy you walk into today is very different from the first pharmacy that opened in this state 10 years ago. I think this is a very important concept that we’ve evolved with as consumers have advanced. and vice versa.”
“There’s more competition.”
Brian Lewandowski, executive director of business research at the Leeds School of Business at the University of Colorado Boulder, said Colorado’s industry is entering the mature stage of its life cycle.
“We had a first-mover advantage, but as other states legalize, there will probably be more competition for Colorado producers,” Lewandowski said. “You can’t move the product between states, but I think legalization in some of the other states has increased competition when you think about people coming to Colorado and becoming customers. ”
CU Boulder has partnered with the Colorado Department of Revenue’s Marijuana Enforcement Division on an online dashboard that tracks marijuana sales, licenses, and prices.
According to the Department of Revenue, total cannabis sales from legalization through August 2023 exceeded $15 billion. Monthly marijuana sales across the state peaked in July 2020, according to dashboard data. Since June 2021, the year-on-year rate of change in monthly sales volume has been negative.
Prices are falling, and marijuana licenses are decreasing. The average price per gram of recreational cannabis flower in 2023 was the lowest since legalization.
Lewandowski said there are several reasons why prices and sales are declining. Just as advances in technology have made computers cheaper, marijuana production may also be becoming more efficient and lower in price.
He said it’s impossible to tell whether companies are selling the same amount or less. Price compression may mean that the same amount of product is sold for a lower amount, or it may mean that fewer products are sold.
The amount of marijuana sold is not tracked on the dashboard, nor is the number of people making their own products in small quantities at home.
“While we continue to see some companies really growing, the fact that some companies are being acquired or even shut down makes it a tougher business than it was in 2014. I think that suggests that,” Lewandowski said.
“A little overregulation”
Bradley said some things have gone well since legalization. Public safety is protected without the emergence of organized crime and cartels, businesses are compliant, and new jobs and tax revenue are created to fund initiatives such as youth prevention, mental health, and impaired driving prevention. I’m here.
But Bradley said there are other aspects of Colorado’s legalization model that will need to change going forward. As an example, he said existing tax rates and regulations are not sustainable for the industry and are even redundant or completely unnecessary.
“Tax rates of 15% at the state level and up to 10% or even 12% at the local level are simply not sustainable in a mature industry,” Bradley said. “You don’t see tax rates like this in the alcohol industry or, frankly, in any other established industry.”
He said the number of license surrenders was increasing and businesses were closing down at an alarming rate, especially on the cultivation side. Bradley said Colorado lost 10,000 cultivation jobs last year alone, representing about 25% of its workforce.
“They’re your neighbors and your friends,” Bradley said. “These are the people who take their kids to the same daycare centers that you take your kids to. They’re the people who have lost jobs in and around our communities.”
The decline also affected tax collections. Bradley said Colorado’s tax revenue in 2023 is nearly $100 million lower than it was two years ago. This is money gone from youth prevention and mental health activities funded by marijuana taxes. He said local governments are trying to figure out how to deal with the decline in weed tax revenue and fund needed programs.
“It’s clear that the regulatory model is doing a lot of things right, and it’s also clear that the 10th year of legalization, 2000, needs to be fundamentally different than the 10th year.” Mr. Bradley said.
Donaldson said one of the biggest changes over the past decade has been the social acceptance of marijuana. People are becoming more knowledgeable about consumption, safety, and products. We hope the state will reevaluate its regulations in the future.
“I think there’s a little bit of overregulation right now. I think this is making it more difficult for companies to follow certain more stringent guidelines,” he said, adding, “Moving forward, I think we’re going to see more common-sense regulation. “We hope that some of the handcuffs and regulations that were put in place that were more stringent will be removed.” When the industry was just starting out, it was based on fear. ”
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