Colorado has now generated more than $1 billion in total state revenue from the legal marijuana industry, another milestone for the state that legalized cannabis in 2014.
Colorado already has posted some big numbers: More than $6 billion in total sales of cannabis since the birth of the new industry — over $6.5 billion at the end of May, according to just-released monthly data from the state. And the state’s revenue from adult-use marijuana sales has accelerated.
April and May were the two highest-grossing months in the five-year history of the new industry, with Colorado revenue reaching its highest monthly take ever in April (which includes the 420 holiday), at roughly $24.2 million. The state’s legal marijuana sales revenue doubling from the $500 million mark to $1 billion ($1,017,120,136 exactly) took under two years, while getting to $500 million took close to three and a half years. Since July 2017, Colorado total monthly tax and fee revenue from marijuana sales has never dipped below $20 million. In February 2014, the first month with sales tracking data, total state revenue was $3.5 million.
At CNBC’s recent Net-Net event held in Denver on May 1, Colorado Gov. Jared Polis said, “It’s going very well. … It’s creating tens of thousands of jobs, tax revenue for the state, filling up buildings for landlords and reducing crime. … Although I like to tell my peer governors in other states ‘It’s not going well, don’t do it.’ There is obviously more advantageous to us when we are all a little bit more special, and obviously, more and more states are moving in this direction.”WATCH NOWVIDEO03:51Gov. Polis of Colorado with Scott Cohn at Net/Net Denver
Illinois recently became the 11th U.S. state to approve cannabis for recreational adult use, joining the state of Washington, Alaska, Colorado, California, Maine, Massachusetts, Oregon, Vermont, Michigan and Nevada. Washington, D.C., also has legal marijuana sales. The Illinois law will go into effect on Jan. 1, 2020.
Illinois became the second state after Vermont to legalize marijuana through its legislature rather than a voter referendum. Democratic governor J.B. Pritzker endorsed the policy as a way to help shore up a state that is in fiscal crisis. His budget proposal for the year starting July includes an estimated $170 million from the sale of marijuana producer licenses.
More than 30 states already have medical marijuana use.
Recreational marijuana was legalized by California voters in November 2016, but its marijuana industry is struggling to compete with the black market and is facing challenges that include banking access and high taxes. Last month the California governor’s new state budget plan slashed cannabis tax revenue projections by $223 million.
Lack of access to banking options led California’s senate to approve state-chartered cannabis banks to help the industry get around restrictions on access to banking services. The federal government also is considering the SAFE Banking Act.
Colorado Gov. Polis told CNBC’s Scott Cohn that its first mover advantage in the cannabis business will be key to developing a much broader economic engine for the state than just tax revenue on marijuana sales. “We are always going to be relatively small potatoes on the actual sales. … We are just not going to be as big as states like California or New Jersey. … We want to make sure that 10 years from now, point-of-sales systems, chemistry, genetics — all those pieces — are housed here in Colorado with successful companies that power a multibillion national industry.”
Recent efforts to create legal marijuana sales markets in several states, including New Jersey and New York, have stalled this year though legislators continue to pursue the measures. In Vermont, where marijuana legalization does not include commercial sales, the legislature has failed this year to enact legislation that would create a commercial market, but plans to try again.
Colorado has 2,917 licensed marijuana businesses and 41,076 individuals who are licensed to work in the industry.
In an emailed statement to CNBC accompanying the May-end sales data, the state pointed to several factors it thinks have been key to the success of the cannabis business: establishing retail edible serving sizes to encourage responsible adult consumption; a focus on production management that monitors marijuana supply and demand rather than capping overall state licenses; and prioritizing data collection and analysis from its seed-to-sale marijuana inventory tracking systems to keep the public informed.