Last year Colorado marked four years of legal marijuana sales and the data from the state government shows a number of lessons that other states can learn from Colorado’s experience. The following are some of those key lessons.
The Revenue Potential is High
It wasn’t just hype when marijuana legalization advocates campaigned on the promise that legalizing marijuana would be good for the economy. Colorado’s data reveals that cannabis sales amounting to more than $6 billion were recorded between 2014 and 2018. These sales resulted in tax revenue exceeding $1 billion, and the state coffers are the better for it.
States that are considering legalizing marijuana should therefore have no doubt that the industry has the potential to boost their economies if they design appropriate laws and regulations.
Medical Marijuana Declines in the Wake of Recreational Marijuana
Colorado’s experience also shows that the medical marijuana segment tends to register falling numbers if recreational marijuana is legalized. For example, two-thirds of the marijuana sales described earlier were for recreational marijuana. Since legalization, medical marijuana sales have registered a 13 percent decline.
This drop has occurred in spite of the incentives established to boost the medical marijuana segment of the market. For example, Colorado offers tax exemptions and allows patients to buy larger quantities of medical marijuana.
Marijuana is Good for Tourism
The four-year statistics from Colorado also reveal that tourism was boosted as a result of the legalization of marijuana. So far, 3,388,000 “canna-tourists” have been recorded in the state. These are non-residents who have purchased either recreational or medical marijuana in Colorado.
If this number of non-residents has bought legal marijuana in Colorado, they have also spent on other products and services, such as accommodation, food and transportation. This goes to show the extent of the ripple effects of legalizing marijuana.
Innovations Drive a Saturated Market
Four years after the marijuana industry was legalized in Colorado, it is reasonable to say that the industry is almost saturated. At this point, innovations, such as new marijuana delivery systems, social consumption lounges and the development of niche markets are the new frontier of opportunity in the sector.
This means that other states that have either legalized marijuana or are planning to do so must have a robust and responsive regulatory system so that the industry doesn’t stagnate when it nears saturation.
Industry analysts strongly believe that the different cannabis industry players, such as The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF) and The Supreme Cannabis Company Inc. (TSX.V: FIRE) (OTCQX: SPRWF), take careful note of the lessons that each market offers and they use that data to fine tune their next moves.
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