Colorado among states with biggest decline in cannabis tax revenue as more states legalize

Colorado's marijuana sales and tax revenue are back on the decline after a hopeful end to 2023, indicating there's more fueling the market than simply recovering from the pandemic.

The falling demand is largely due to two main factors: decreased consumption following a pandemic-fueled surge and the legalization of marijuana across other states in the country, according to the September 2024 Economic and Revenue Forecast report.

Presented by the Colorado Legislative Council Staff, preliminary numbers for the 2023-24 fiscal year show a 12.8% decrease in total tax revenue from the marijuana industry compared to the year before. Colorado's marijuana tax revenue reached $248.2 million in 2023-24, according to the report. The forecast for the next fiscal year is expected to continue falling before hitting a 3.2% increase in 2025-26.

Most of the state's revenue from marijuana comes from its 15% excise tax and 15% sales tax, as well as the 2.9% state sales tax on medical marijuana.

Lowered revenue doesn't directly translate to lower sales, however, as an "oversupply of marijuana" has resulted in lower prices at wholesale and retail levels, according to the report.