Colorado’s cannabis industry is facing declines it has never seen before just as Grand Junction, fashionably late to the party as usual, is getting ready to open its first retail marijuana stores, but we don’t think things are as dire as they might appear.

The contraction is coming after steady increases in cannabis revenue were delivered every year since the first stores opened in 2014, according to reporting by The Colorado Sun.

That party ended this year.

Through July, taxes and fees collected from retail marijuana sales reached $198.3 million, down $53.7 million – or 21% – from the same seven months in 2021.

Last year set a record in Colorado, with dispensaries selling $2.2 billion worth of cannabis and the state collecting $423.5 million in taxes and fees.

The decline seems to be driven by a few factors. More states have legalized recreational marijuana, meaning there is less cross-border demand. Legal weed in neighboring states like Oklahoma and New Mexico has resulted in steep declines in the Colorado border towns that had been the only legal option for people in those states.

Increased product supply and more competition is also driving prices down. This is a classic problem in agriculture, but is also the reality of the market and prices will stabilize over time.

A year ago, marijuana flower was selling for $1,300 a pound and the trim used for edibles, tinctures and oils was selling for $425 a pound, the Sun reported. The latest average market rates released by the Colorado Department of Revenue show flower selling for closer to $700 a pound and trim is $225 a pound. At the same time, businesses are seeing their own costs go up due to inflation.

This may sound grim for Grand Junction, which is hoping the industry could help fund a recreation center. Even with a dip in the marijuana market, we think the city should still get some benefit from the industry for a few reasons.

While New Mexico has legal weed now, we think it will be a while before Utah follows suit. That could mean some Moab visitors will come check out our trails and partake in legal Colorado cannabis before heading back to Utah.

We also think the city has been realistic from the start in what tax revenue from marijuana sales could do. This revenue source was never going to be a panacea. What it can do is provide some additional revenue to a project the city prioritized to make it an easier lift.

The city was never under the delusion that marijuana would pay for everything. From the start, city staff and the City Council has known there would be a need for additional revenue to pay for the type of recreation facility the community envisioned.

The amount of revenue the city can collect from marijuana still remains to be seen. It may be less than initially estimated, and the city should consider that carefully when deciding how much additional revenue it will need.

Marijuana was never going to pay for a rec center on its own and this downturn has made that clear.

Grand Junction Daily Sentinel Editorial Board