Industry insiders in Colorado predicted that new state medical pot regulations enacted July 1 would lead to consolidation in the industry, triggering a wave of closures and mergers.
That’s certainly happening, although to a lesser degree than many thought – at least so far. There are now 736 dispensaries with “on-track” license applications, down from 759 in May, according to information in this blog entry by John Ingold of the Denver Post. That’s a decline of about 3 percent, with most (if not all) of the dip likely tied to the regulations. The number of dispensaries in Colorado also has shriveled 10 percent from 818 a year ago, though some of the MMCs that closed in this period likely succumbed to competition or other factors.
The rate of consolidation tied to the regulations is not earth-shattering. But we could see many more dispensaries fold or merge in the coming months as the state’s medical marijuana division ramps up its enforcement efforts. Right now, many dispensaries are getting a free pass to continue operating as long as they show they’re working towards compliance. A number of dispensaries will no doubt find it impossible to fully comply, largely because of the costs involved, and will therefore close up shop.
Kudos to Ingold for tracking this information and creating such a comprehensive, detailed map of dispensaries. There’s a wealth of good data here, and I’m surprised that Ingold didn’t write a separate article for the print edition focusing specifically on the 3 percent decline, as to me that is the meat of his research.