Jonathan Spadafora knew things were going bad when April 20, 2022, Holy Cannabis Day, failed to deliver the sudden marijuana delivery that Colorado retailers are used to. Across the state, dispensary sales are down about 25 percent compared to 4/20 a year earlier. But it wasn’t until last May, when demand continued to fall, that Spadafora, president of Veritas Fine Cannabis, realized the industry was in free fall.

For the first time since sales of licensed recreational weed began in Colorado in 2014, two years after legalization, the Centennial cannabis sector is experiencing a prolonged contraction. Mid-2022 saw the fourth consecutive quarter of declining sales, almost a reversal of the record revenue the industry boasted during the early days of the pandemic. (The medical and retail sectors have experienced nearly identical recessions.) And in response to dwindling demand, dispensaries that stocked 4/20 in stock found themselves stuck with overstocking and slashing requisitions for growers like Veritas, which produces flowers and earlier. Wrapped joints for stores around the state. Even large companies are struggling. Chains Buddy Boy and TweedLeaf closed seven stores each over the summer.

Spadafora believes that a number of factors may have contributed to the deterioration of the cannabis tail. At first, the pandemic boom was likely driven by the fact that people were stuck indoors – often bored or stressed. “People weren’t in the office,” Spadafora says. “They were at home and had the ability to roll a joint and do their emails all day long.” Then there were the stimulus checks, which helped fund the run on the coins as total sales hit an annual peak of $2.2 billion in 2021. Fast even today, Spadafora notes, people are worried about inflation. In addition, nine other states have legalized recreational weed in the past two years, affecting the cannabis trade in Colorado, says Truman Bradley of Denver-based Marijuana Industry Group, a cannabis trade association. New Mexico’s entry to the market in 2021 was particularly painful, corresponding to a 40 to 50 percent decline in cannabis sales in the southern border towns of Colorado.

Illustration by Shawn Parsons

Veritas, one of the state’s largest marijuana producers, couldn’t weather the economic downturn without downsizing: In June, the company decided to close one of its three farming facilities and lay off 33 employees — nearly a quarter of its workforce. “It’s hard because these weren’t people who make mistakes,” Spadafora says. “I think one thing we learned is that Colorado is not a $2.2 billion market. It’s likely to be a $1.8, $1.7, or $1.6 billion market.” Farmers and sellers alike will simply have to hope that the market will hit bottoms before their businesses go downhill.

This article was originally published on November 5, 2022.

Chris Walker

Leave a Reply