Following a pandemic “high,” Colorado marijuana sales have been plummeting for months.

Sales skyrocketed for the marijuana industry in the beginning of 2022, a trend that began at the onset of the COVID-19 pandemic.

Now, marijuana industry officials are seeing the other side of the pandemic “bump,” according to Ricardo Baca, founder and CEO at Grasslands, a marketing and PR agency that focuses on cannabis and psychedelics.

Baca noted that, during the early months of the pandemic — when authorities imposed quarantines and people shifted to working remotely — people used recreational marijuana more often.

Experts and industry insiders pointed to several factors contributing to the decline in marijuana sales, including a shift in consumer behavior, more states legally permitting its use and less disposable income as a result of inflationary pressures.

In 2022, Colorado collected $325 million in marijuana tax revenue, a nearly $100 million decline from 2021, which produced $423 million in taxes. In 2020, that number was $387 million.

Actual sales are down even more than that, according to The Marijuana Industry Group Executive Director Truman Bradley. MIG is the oldest and largest trade association for the regulated cannabis business in Colorado.

“Any time sales drop as low as they’ve dropped, you see businesses closing, you see Colorado workers being laid off,” Bradley said. “And that ripples out not just to the plant-touching companies but to the ancillary companies both direct and indirect.”

Taxes are collected in three categories: state sales tax on marijuana sold in stores (2.9%), the state retail marijuana sales tax on retail marijuana sold in stores (15%) and the state retail marijuana excise tax on wholesale sales or transfers of retail marijuana (15%), according to the Colorado Department of Revenue, which is responsible for tracking data on sales of marijuana throughout the state.

Total taxes collected to date from marijuana sales have reached $2.3 billion, the department said.

Last year, over $675 million of the taxes collected from the marijuana industry went to the Marijuana Tax Cash Fund; the Public School Capital Construction Assistance Fund received nearly $391 million; the Public School Fund got $276.6 million; and, the rest was split between local government ($138.38 million) and the general fund ($135.99 million).

Experts anticipate that, with new markets coming online through state legalization, sales in Colorado also will drop.

Luke Niforatos, executive vice president of the anti-marijuana group Smart Approaches to Marijuana, said the decline in sales should be “celebrated.”

“Big Marijuana profited off of increased addiction and use throughout COVID-19 lockdowns and the isolation that so many Coloradans felt during those years. What we are seeing now is likely a return to the pre-pandemic average useThis decrease should be celebrated, but we need to do more to educate the public on the harms of marijuana use and hopefully we will continue to see these numbers decline.”

Marijuana-based businesses are seeing the effects of declining sales beyond the dispensaries. Companies are shedding employees. Johnathan Spadafora, president of Veritas Fine Cannabis, said his company had to let go 34 employees because of declining sales.

“For more of the time that I’ve done this job, the biggest problem that we faced was how do you create more product as fast as you can.”

The economy overall has been adjusting to inflation and rising interest rates, and it’s harder for consumers to make room for discretionary spending, Spadafora said.

“As one of the only products that can’t be purchased with a credit card, we felt that very severely across all of cannabis,” he said.

Alison Di Spaltro, CEO of the marijuana company Escape Artists, believes several factors contributed to the decline in sales.

Other states legalizing recreational marijuana affected border stores and made it less of a tourism novelty, she said, adding that there is less foot traffic in stores, there were no stimulus checks like there was in 2021 and consumers have less cash on hand due to inflation.

“What I’m hoping is this year, we kind of get to a point where we find what is the steady state [of sales] for Colorado,” Di Spaltro said.

About 41,000 people work in plant-touching marijuana companies. Add in support and ancillary companies, that number rises to about 100,000 employees in Colorado, Bradley said.

“I don’t have a crystal ball as to the future, but there are a few things I know definitively: The first is decade No. 2 of legalization in this state needs to look fundamentally different than decade No. 1,” Bradley said. “The cannabis industry is extremely compliant and it can be a good source of revenue for state and local governments, but we need to take a hard look at the regulations that were first put in when no one knew how this was going to go and assess whether that’s actually appropriate or whether it’s time to maybe relax those a little bit.”

Assistant cultivator Saul Servin writes down the weight of a “Mac” strain marijuana plant while harvesting at the Euflora cannabis greenhouse on Tuesday, March 1, 2022, in Denver, Colo. (Timothy Hurst/The Denver Gazette)

Timothy Hurst

President of Veritas Fine Cannabis, Jonathan Spadafora, talks about how his company and others in Colorado’s marijuana industry are dealing with a $400 million decline in revenue between October 2021 and October 2022. Other states legalizing recreational pot, the return to office for many workers and other factors have contributed to the losses for the industry which had never seen consecutive months of sales decline prior to what is currently 17 straight. (Video by Tom Hellauer/The Denver Gazette)