Colorado cannabis businesses find themselves in a challenging situation due to factors such as oversupply, limited demand, competition from neighboring legal states, and the persistence of black market sales.

A recent analysis by The Denver Post sheds light on the aftermath of the post-pandemic cannabis industry in Colorado. While the state once experienced a peak of $226 million in combined recreational and medical cannabis sales, current sales have declined, leading to struggles for small businesses.

According to Val Tonazzi, a cannabis salesperson interviewed by The Denver Post, the market is currently in a bad state, with businesses closing left and right. In February, medical cannabis sales in Colorado hit a low of $15 million, the lowest since retail sales began in 2014. March saw a slight increase to approximately $17 million in medical cannabis sales, but it was $5 million less than the previous year. Similarly, recreational sales in March recorded $122 million this year, reflecting a $17 million decrease compared to the previous year.

While the U.S. Department of Health and Human Services announced the end of the COVID-19 public health emergency on May 9, cannabis business owners continue to face challenges such as oversupply, limited demand, record-low prices, and a lack of cannabis tourism. The approval of recreational cannabis in neighboring states like Montana, Arizona, and New Mexico in recent years has further intensified competition for Colorado.

The 2023 Vangst Jobs Report by Vangst, a cannabis job company, revealed a 2% decline in cannabis jobs, with Colorado experiencing the second-highest loss of cannabis jobs. Additionally, Colorado ranked sixth among states with fewer cannabis job opportunities compared to states like California, Michigan, Illinois, Florida, and Massachusetts.

The difficulties in the cannabis industry are not limited to small businesses. Larger companies like Curaleaf have also been forced to make changes. Curaleaf closed its offices in Colorado, California, and Oregon in January as part of its streamlining efforts. CEO Matt Darin cited thriving black market competition and a lack of meaningful enforcement as factors influencing their decision.

The closure of cannabis businesses is also impacting the real estate market, as there has been a decline in commercial property purchases by marijuana industry-related businesses and an increase in leasing activity, as reported by the National Association of Realtors.

Entrepreneur Renée Grossman, who founded multiple retail storefronts and expanded into cultivation and manufacturing in Colorado, noted that there are too many stores, cultivation facilities, and products in the market. Grossman expressed concerns about investors remaining cautious and waiting for the market to stabilize, but uncertain when that would happen. Many business owners, including Grossman, have had to lay off staff to manage expenses, and smaller companies are particularly feeling the financial strain. Grossman suggested that mergers may be a viable option for smaller businesses to strengthen themselves against larger competitors.

Despite initial hopes for cannabis tourism in Colorado, the increase in states with recreational cannabis has shifted interest away from the state. Buck Dutton, vice president of marketing at Native Roots Cannabis Company, mentioned a decrease in sales during the 4/20 cannabis holiday, indicating a decline in the need for people to travel to Colorado for such occasions.

Truman Bradley, executive director of the Marijuana Industry Group, likened Colorado's current situation to a glimpse of the future. He noted that the excitement surrounding Colorado as the first state to legalize recreational cannabis has faded, and the industry needs to become leaner through reduced competition. Bradley emphasized the importance of state legislators reevaluating the legalization landscape, stating that the second decade of legalization should differ fundamentally from the first.