By Matt Whittaker / NewsBreak Denver
(Denver, Colo.) Slumping cannabis sales in Colorado are increasing the stakes for Denver’s marijuana industry as it faces a ballot initiative that would place a new tax on the city’s weed sales.
As legislation limits medical purchases, inflation eats into personal spending, more states legalize pot and the illegal market offers competition, the dollar amount of Colorado’s marijuana sales dropped more than 20% while Denver County’s fell more than 30% in June from the same month last year, according to the latest figures from the Colorado Department of Revenue.
Total sales for the first six months of the year indicate Colorado could see its first annual sales decline since state-licensed retail marijuana sales began in 2014.
Through July, the state has brought in less than $200 million in marijuana taxes and fees compared with more than $250 million in the same period during 2021, a year when both total sales and state revenue hit a record.
The decrease in tax revenue endangers public programs that depend on marijuana sales, and another tax on cannabis sales being contemplated in Denver would make things worse, says the Wheat Ridge-based Marijuana Industry Group (MIG).
“High taxes and burdensome regulations are pushing this industry to the brink and making it increasingly difficult for Coloradans with critical conditions to get the medicine they rely on,” said MIG board chair Tiffany Goldman. “While we’re proud to generate millions in revenue for critical public programs related to affordable housing, education and mental health, this revenue stream is now at risk.”
A measure that earlier this month made the Denver 2022 ballot would add a 4.5% sales tax to marijuana product sales in the city and use a portion of already existing tax to fund out-of-school enrichment and learning opportunities for city children. The city already charges the general sales tax of 4.31% plus a special sales tax of 5.5% on retail marijuana sales, in addition to state taxes.
By raising prices for marijuana, the measure would risk further declines in sales and tax revenue in addition to pulling funding from homelessness services and affordable housing programs, MIG says.
Called My Spark Denver, the measure is similar to a statewide initiative that voters, including those in Denver, rejected last year. Still, the vote was much closer in Denver than it was throughout the state.
John Bailey is hoping Denver voters will have a change of heart this time around so the tax measure can help kids.
The founder of the Black Cannabis Equity Initiative, a Colorado group advocating for cannabis industry inclusivity, said the worries about taxes as a cause for the sales decline are only an interpretation by one part of the marijuana industry.
The recent sales decline in the state is part of an inevitable leveling off as the initial sales boom fades, he said. As more states legalize marijuana, fewer people come to Colorado to buy legal pot, he said.
Although not as much money is being made as in the past, the sales drop isn’t significant and taxes on marijuana products are “the cost of doing business,” he said.
“We need to stop acting like we’re cash poor,” he said.