Chart of the Week: Initial Rec Marijuana Sales in 3 States Highlight Role of Business, Regulatory Environment

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By Becky Olson

All cannabis markets are not created equal.

The first three states to launch recreational marijuana programs had vastly different experiences during their initial week of sales.

Colorado posted an impressive tally early last year, Washington State recorded an anemic total in mid-2014 and Oregon blew both out of the water earlier this month.

At first blush, these three states appear to have a lot in common.

They’e all located in the western part of the country, where attitudes toward cannabis are more liberal and use of marijuana is higher. They also each had pre-existing medical cannabis markets, and all three states were already popular tourist destinations for reasons unrelated to marijuana.

But vast differences in state regulations and the circumstances surrounding the commencement of recreational sales tell another story.

When recreational sales first began in Colorado on Jan. 1, 2014, the state already had a well-established and regulated network of medical cannabis dispensaries in place. Those dispensaries were the only businesses initially allowed to sell recreational cannabis, and they had to obtain a new license to do so.

Additionally, they had to cultivate at least 70% of their inventory, so it wasn’t just a matter of setting up a storefront and calling around to wholesale growers to procure inventory.

The end result: approximately 30 MMJ dispensaries in the state were ready to sell when the program launched. Prices averaged around $15 per gram, plus nearly 30% in state taxes, leading to an estimated $5 million to $6 million in sales.

In Washington State, the circumstances around the beginning of rec sales on July 8, 2014 led to a very different outcome.

Dispensaries existed prior to the legalization of recreational marijuana, but they weren’t governed by any statewide regulations. So there was little understanding of how to operate in a regulated environment. Most dispensaries also didn’t apply for rec licenses. Instead, newbies to the cannabis game did, and they had to start from the ground up.

When rec sales began, only five stores actually opened, and they faced severe inventory shortages due to an insufficient number of growers licensed in time to produce a harvest for the big day.

Top that off with some of the highest prices ($20 a gram) and sales tax rates in the country at the time – as well as the ongoing existence of the unregulated, vastly cheaper MMJ market – and demand wasn’t nearly as strong as it was in Colorado, with sales hitting just half a million dollars.

By contrast, the circumstances in Oregon when rec sales began last week were more conducive to a fast start.

Existing MMJ dispensaries were free to begin sales to the general public without a new business license, and rec-specific shops won’t be licensed until next year.

Dispensaries and growers had ample time to prepare – so supply was abundant – and recreational sales are currently not taxed, leading to average prices of about $10 per gram.

The end result: nearly 250 businesses started selling to rec customers right out of the gate, leading to just over $12 million in sales during the first week, according to estimates released by the Oregon Retailers of Cannabis Association. (Note: The association only estimated six days of sales, but Marijuana Business Daily extrapolated out to a full week to allow a comparison to the numbers for Colorado and Washington State.)

It remains to be seen where Oregon’s market will settle in, but each of these cases underscores how much of an impact these factors make in the overall business environment when a state is ready to begin recreational marijuana sales.

Becky Olson can be reached at