Colorado’s Peak…and Valleys

With Colorado’s distinction of being the country’s first Adult-Use legal weed state, its cannabis market was hailed as the model for states that would soon follow its lead. But the last few years have seen the market experience a significant downturn (not unlike other states). Colorado’s cannabis sales have slipped $700 million since pandemic highs of 2020, leading to widespread layoffs, business closures, and overall market contraction.

The initial boom led to a surge in new businesses, creating an oversaturated market. This saturation has made it difficult for individual businesses to thrive. As more states legalized cannabis, competition intensified. And it’s not just neighboring states that have started to siphon off customers who previously traveled to Colorado for legal marijuana.  More east coast and midwestern states are legalizing leading to a downturn in weed tourism

Many cannabis businesses in Colorado have faced dire straits. Layoffs and shutdowns are marked by declining number of active business licenses and the closure of retail outlets. Despite these challenges, some businesses have managed to adapt.

Colorado’s experience serves as a cautionary tale for other states with emerging cannabis markets. Regulators need to understand the dangers of market over-saturation, the importance of balanced regulation that doesn’t over burden licensees, and the need to anticipate competition from from changing cannabis laws on the state and national levels.

If you have any questions, please contact one of the authors or a member of the Miller Johnson Cannabis practice group.