Sales of pot top $100M for 12th straight month

The Denver Post - - FRONT PAGE - By Ali­cia Wal­lace

Chalk up an­other mile­stone month for Colorado cannabis sales.

The $127.7 mil­lion worth of flower, ed­i­bles and con­cen­trates pur­chased in May from the state’s mar­i­juana shops didn’t set a record for monthly sales, though. That honor still goes to March of this year, when sales to­taled $131.7 mil­lion, ac­cord­ing to The Den­ver Post’s ex­trap­o­la­tions of Colorado mar­i­juana tax data.

May’s bench­mark, rather, is one of con­sis­tency.

It marked the 12th con­sec­u­tive month that Colorado mar­i­juana sales topped $100 mil­lion.

“I think that $100 mil­lion a month (in sales) are the new norm,” said Bethany Gomez, di­rec­tor of re­search for Bright­field Group, a mar­ket re­search firm fo­cused on the cannabis in­dus­try.

Some no­table stats from the 12-month run:

• Al­to­gether, the monthly sales reached $1.4 bil­lion.

• Colorado col­lected nearly $223 mil­lion in taxes and li­cense fees.

• Recre­ational sales have con­sis­tently taken a twothirds share of the monthly to­tals.

For May, recre­ational-use sales ac­counted for about $90.1 mil­lion, and those from med­i­cal mar­i­juana con­trib­uted just over $37.5 mil­lion.

The in­dus­try’s 2017 cu­mu­la­tive sales through five months neared $620 mil­lion, gen­er­at­ing close to $96 mil­lion in state rev­enue from taxes and fees.

To­tal sales for the first five months of 2017 were up about 27 per­cent from the same pe­riod last year. And that year-to-date growth rate has held steady for two months in a row.

Colorado’s mar­i­juana in­dus­try re­mains in ex­pan­sion mode, Gomez said, but the sales trends are in­dica­tive that the mar­ket is ap­proach­ing ma­tu­rity.

“What you’re see­ing in Colorado is sim­i­lar to other in­dus­tries. We’re start­ing to see lower dou­ble-digit growth rates, rather than the triple-digit growth rates,” she said. “That time of mas­sive growth ex­pan­sion in Colorado, I think, is over.”

Recre­ational sales have buoyed Colorado’s mar­i­juana in­dus­try for the past four years.

In May 2014, when the recre­ational mar­ket was in its in­fancy and still be­ing built up, adult-use sales ac­counted for 40 per­cent of that month’s to­tal sales. In May 2017, that share was 70 per­cent.

Monthly med­i­cal mar­i­juana sales have re­mained fairly flat — inch­ing up from an av­er­age $32.2 mil­lion in 2014, to $34 mil­lion in 2015, to $36.5 mil­lion in 2016, and $36.7 mil­lion for 2017 thus far. The state’s pa­tient pop­u­la­tion, how­ever, has de­clined.

As of May 31, 2017, a to­tal of 86,964 pa­tients had an ac­tive med­i­cal mar­i­juana reg­is­tra­tion, ac­cord­ing to the Colorado Depart­ment of Pub­lic Health and En­vi­ron­ment. A year be­fore, that fig­ure was 106,066.

In­cen­tive for pa­tients to en­list in the med­i­cal reg­istry has been re­duced by fall­ing prices in Colorado’s adult-use mar­ket, ac­cord­ing to an April re­port by New Fron­tier Data, a cannabis an­a­lyt­ics firm.

But while the adult-use mar­ket was ex­pected to can­ni­bal­ize Colorado’s med­i­cal mar­ket growth, the New Fron­tier anal­y­sis found that strong de­mand for pricey con­cen­trates and ed­i­bles has off­set the de­cline in pa­tient par­tic­i­pa­tion.

Gomez echoed other an­a­lysts’ past state­ments that Colorado’s mar­i­juana in­dus­try is near­ing a plateau and should ex­pect a de­cel­er­a­tion in growth rates — but not nec­es­sar­ily a de­cline in sales.

Even as states such as Ne­vada and Cal­i­for­nia ini­ti­ate recre­ational sales, Colorado’s mar­i­juana in­dus­try sales shouldn’t take too much of a hit, she said. As it ma­tures, the mar­ket re­mains self-con­tained.

“What we’re see­ing in Colorado is an in­crease of cannabis as a life­style and a com­po­nent of a well­ness life­style,” she said.

That in­cludes peo­ple who weren’t buy­ing in the black mar­ket and now have sub­tly in­tro­duced it into their life­style by us­ing cannabis to ad­dress mi­nor med­i­cal con­cerns, mi­cro­dos­ing or sub­sti­tut­ing it in place of an evening glass of wine or beer, she said.

“There is in­creased in­no­va­tion in the prod­uct cat­e­gory, and that’s con­tin­u­ing,” she said. “Con­sump­tion pat­terns haven’t re­ally set­tled in the recre­ational mar­ket yet; peo­ple are still ex­per­i­ment­ing. There is still a lot of room for change there.”

Cannabis con­sumers have shifted from the tra­di­tional dried mar­i­juana flower to in­fused ed­i­bles and con­cen­trates.

New Fron­tier’s anal­y­sis found recre­ational de­mand for flower fell from 85 per­cent in Jan­uary to 64 per­cent in De­cem­ber. Med­i­cal de­mand saw a sim­i­lar de­cline of 87 per­cent to 65 per­cent.

While de­mand for con­cen­trates, ed­i­bles and other in­fused prod­ucts has been strong across the le­gal cannabis states, it has been “no­tice­ably ro­bust” in Colorado’s adult-use mar­ket, the re­port found.

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