Colorado and Michigan, two states known for their thriving cannabis markets, have recently experienced a decline in sales. In Colorado, the cannabis market, which was once a frontrunner in the U.S. for recreational marijuana sales, saw a decrease in sales in 2023. The state’s cannabis sales barely surpassed the $1.5 billion mark, a decrease from $1.7 billion in 2022 and a significant drop from the peak of over $2 billion annually in 2020 and 2021.
This downturn marks the lowest sales year since 2017, with December sales totaling $115.8 million and a year-long total of $1.52 billion. Despite this decline, Colorado has still reached a milestone of $15.5 billion in total sales since the market’s inception in January 2014. The decline in sales is attributed to the end of the pandemic boom and the emergence of competitive markets in nearby states, such as New Mexico, which reported $555.8 million in cannabis goods in 2023.
The cannabis market in Colorado is also experiencing a trend toward consolidation, with over 1,100 stores indicating a move towards fewer, larger players in the industry. Leading chains like PharmaCann and Schwazze are examples of this consolidation trend. Despite ongoing price deflation, there is a slight stabilization in retail and wholesale prices.
In Michigan, the cannabis industry also faced a sales decline in January 2024. Total sales amounted to $242.8 million, reflecting a 13.5% drop compared to the previous month. This decline is part of a broader trend of slowing growth, with the lowest year-over-year increase since March 2022. However, adult-use sales continue to grow, compensating for the decline in medical sales. The state’s market saw significant growth in 2023, reaching $3.06 billion, a 33.3% increase from the previous year. The expansion of supply and distribution networks is expected to further boost the market.
Despite being one of the fastest-growing markets, Michigan’s cannabis market faces tough economics. With 751 recreational and 245 medical stores, the market is fragmented. Public multi-state operators (MSOs) like Red White & Bloom Brands Inc., TerrAscend, 4Front, Ascend Wellness Holdings, Cresco, and Verano are key players in this fragmented market.
On the other hand, Virginia is advancing towards retail marijuana sales. The Virginia House of Delegates recently passed HB698, aiming to establish a retail marketplace for recreational marijuana. This move comes after voters approved the end of the prohibition on recreational marijuana in 2021, with expectations for retail sales to begin by January 1, 2024. The passage of this bill reflects a significant political shift, with Democrats now in control of both houses of the General Assembly. The Cannabist Company Holdings Inc., Green Thumb Industries Inc., and Jushi Holdings Inc. are set to lead Virginia’s recreational cannabis market by July 1, 2024.
These firms are expected to leverage their early entry, limited competition, and the state’s market potential to establish a significant presence in Virginia’s budding cannabis industry. Overall, while some states are experiencing a decline in cannabis sales, others are making progress towards establishing retail markets, highlighting the ever-changing landscape of the cannabis industry.
