The United States has a problem. Many states are cash poor and are struggling to find new sources of revenue not detrimental to the environment and which create jobs. Colorado, however, has the solution to this problem and it is called marijuana.
During 2014, Colorado generated $700 million in revenue from marijuana. The state made $385.9 million from medical marijuana and $313.2 million from recreational marijuana.
That is an “Insane Number”
“That’s an insane number, isn’t it?” said Caitlin Murphy, director of marketing at the Emerald Fields dispensary group, which will open its second recreational pot shop in Manitou Springs in mid-March. “We have very high hopes for the industry and where it’s going, and we know that the growth is going to be even bigger this year.”
No, it is not insane. The marijuana industry is in its infancy in Colorado. The industry is in the first inning of what will be a multi decade growth cycle. Our researchers expect these numbers to increase year over year as the market develops and new businesses open. What we find to be “insane” is that these numbers only take into account the actual sale of marijuana and do not account for the revenue generated by ancillary businesses such as grow lights, soil, vaporizers, security equipment, and other products and/or services. These businesses saw the demand for their products skyrocket during 2014.
Colorado Made How Much in Tax Revenue?!?
Colorado generated $76 million in marijuana tax revenue and industry fees from the medical and recreational marijuana industry. The state made so much money that they had to give some of it back to state residents…now that is insane.
“I think it’s an amazing number,” said Meg Collins, executive director of the Cannabis Business Alliance, “and it’s an amazing number when you put it into the context of what a success the industry and the state has had in regulating the safe sales of these products.”
Just the Tip of the Iceberg
Colorado State Senator Pat Steadman said he’s “feeling very encouraged by what we’re seeing so far. Everyone keeps calling this ‘Colorado’s experiment with marijuana legalization,’ but so far everything seems to be working better than planned. … Right now we’re still rolling things out, but it just seems to be rolling out smoother than anyone expected.”
“We’re just seeing the tip of the iceberg,” Steadman said. “There are still a lot of sales that are going on that aren’t in the regulated, legal market, and that’s part of the reason why the taxes weren’t as big as anticipated (in 2014).”
Steadman expects to see the state generate more revenue from the sale of cannabis during 2015 from both a tax and sales standpoint. He also stated that there is work to be done on the regulatory side to eradicate the black and grey markets.
December was the Best Month for the Colorado Cannabis Industry
December marked the best month for Colorado’s marijuana market. The medical and recreational market saw sales increase by $4 million compared to November, which probably has something to do with the amount of people travelling to the state for the holidays. In December, the recreational marijuana market generated $35.1 million in revenue and the medical marijuana market generated $31.7 million in revenue.
Our analysts expect to see Colorado generate more revenue during 2015 due to the increased number of dispensaries operating in the state. Our analysis found that the number of dispensaries is one of the primary drivers of revenue growth for the legal marijuana industry.
In January 2014, there were only 30-40 recreational marijuana dispensaries open in Colorado and the state generated $2.1 million in taxes and fees and $14.7 million in revenue. In December 2014, there were more than 300 recreational marijuana dispensaries open in Colorado and the state generated $6.9 million in taxes and fees and $35.1 million in revenue.
The marijuana industry is just getting started and investors rarely have the opportunity to get in on the ground floor of an industry. Technical420 expects to see more state markets open during the next few years which will prove to be a major a catalyst for this industry.