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.
According to the report, supplanting the black market accounted for 36.2 percentage points of the overall growth in sales.
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.