Pitler and Associates
COs First Marijuana Study Released
Original article by Vice.News.com. Read full article
More than six months after Colorado legalized marijuana for recreational use, what may be the first-ever legal marijuana study indicates that demand has been higher than initially predicted — but it still hasn’t come close to overtaking the state’s medical marijuana market.
The report was commissioned and released by the Department of Revenue, the agency tasked with regulating Colorado’s pot industry, and was compiled by the Marijuana Policy Group.Results show the demand for both medical and recreational marijuana was almost a third higher than the regulator had expected. According to the report, total demand for 2014 is 130 metric tons, with more than 120 tons claimed by state residents and the remainder scooped up by tourists. In the Denver metropolitan area, 44 percent of sales went to visitors. A whopping 90 percent of sales in mountain communities went to out-of-staters.
But even with the retail pot industry growing, Colorado’s medical sales continue to blow the commercial sector out of the water. Not only did the industry maintain most of its market share, but the study also concluded that “conversion from medical to retail consumption is relatively low.”
“This may indicate that medical consumers would rather pay the medical registration fees as opposed to the higher taxes,” the study found. “Or that there are currently relatively few retail outlets compared to medical centers.”
While the retail sector was not expected to overtake the medical side this early on in the legalization process, it’s an important shift that needs to happen for the state to capitalize on tax revenues.
“If the state wants to collect revenue, they have to run the business through the revenue side,” said Mark Kleiman, a professor of public policy at the University of California Los Angeles and Washington state’s pot consultant. He explained that Colorado’s medical marijuana prices have always been cheaper than anywhere else, and that it’ll be important to see whether commercial rates will fall to a point where they are competitive with medical prices. Currently, the average market rate is $220 per ounce.
Kleiman said one way the retail sector could increase its marketshare would be to encourage the state to crack down on doctors writing fictitious or dishonest medical marijuana prescriptions. Another leg up for the retail sector may come from the variety of forms in which the commercial vendors dispense marijuana.
“The big thing happening in the market is the shift toward edibles and concentrates and away from smoked product,” Kleiman said. “It’s a big advantage that the legal sector has over the illegal.”
The study reported that the demand increase for concentrates and edibles has made it more complicated to measure Colorado’s market size, especially because there are no weight-equivalent conversions for these products. But while the numbers are interesting, Kleiman said there’s little to glean in the way of future industry trends from research this early on in the post-legalization period.
“We can’t draw any long term conclusions from the first six months,” he said. “This doesn’t tell us much about long-term revenue prospects.”
A follow-up study is planned for the first quarter of 2015.