Colorado’s legal marijuana sales are skyrocketing but growth is expected to come back to earth in the next five years, reflecting falling prices, a shrinking black market, and fewer “sole-purpose” visitors buying cannabis as other state legalize adult-use sales, a new report predicts.
Legal marijuana sales surged 42.2% between 2014 and 2015, fueled by the transition away from a black market, demand from in-state residents and growth in Colorado’s population, according to the Marijuana Policy Group, a Denver economic and policy consulting firm.
But once that well dries up and other states legalize cannabis, sales growth is expected to slow to 11.3% between 2015 and 2020. Sales are expected to peak at $1.52 billion, Adam Orens, a co-author of the report, told the Denver Post.
That said, the state’s marijuana industry has established a firm toehold and delivers a bigger economic punch than most industries.
Colorado’s legal marijuana market had an economic impact of $2.39 billion in 2015, according to the report.
Legalization created 18,005 jobs last year and $121 million in total tax revenue.
According to the report, the marijuana industry yields more employment and output per dollar than 90% of all industries in the state. The three main reasons for this are: Marijuana can’t be imported; workers are all in-state residents; and owners are primarily in-state.
Marijuana taxes, meanwhile, are projected to surpass cigarette taxes in Colorado by 2020 at about $150 million.
The report also compares Colorado’s legal market “capture” to Washington State’s. It notes that Washington’s population is 40% larger than Colorado’s, yet Colorado’s legal market has five times more sales than Washington’s.