Decoding the Cannabis Problem: Can Higher Taxes Solve It?

Dramatic 2025 Decline: What is Going On with Cannabis in Colorado?

Update Colorado’s Cannabis Industry Faces Unprecedented DeclinesThe Colorado cannabis market is enduring a steep downturn, continuing its trend of declining sales revenue for four consecutive years. Sales figures recorded by the Colorado Department of Revenue show that marijuana retailers sold just over $1.1 billion worth of cannabis products from January to October 2025. This figure falls dramatically short of the $1.4 billion seen in 2024, and experts predict that the remaining two months of the year are unlikely to significantly alter this grim outlook.One alarming trend in Colorado is the simultaneous drop in both sales revenue and the number of product units sold. According to data analytics provider Headset, cannabis unit sales fell by 7.3% year-over-year, from 91.6 million in 2024 to just 84.9 million in 2025. This decline starkly contrasts other legacy markets like California, where despite declining revenues, unit sales saw a slight uptick.Understanding the Factors Behind the DeclineSeveral issues are plaguing Colorado’s cannabis industry, primarily stemming from an oversupply of products that has resulted in price compression since 2022. At its peak in 2022, cannabis sales in Colorado reached $2.2 billion, but falling prices have severely impacted retailer margins and consumer purchasing power.The median price per pound of marijuana has seen a drastic decline as well, plummeting from around $1,721 in 2021 to an all-time low of $648 by December 2025. Consequently, many cultivators are exiting the industry, with a staggering 48% reduction in recreational cultivation licenses noted between 2021 and 2025. By the end of last year, only 488 licenses were active, reflecting a significant industry contraction.The Impact on Retail and CultivationThis downturn has devastating consequences for various cannabis brands and retailers. Notable names—including Bubba’s Kush, Dablogic, and Maggie’s Farm—have shut down operations or relocated due to the persistent decline in sales. Retailers such as Lightshade and Good Chemistry have also been forced to close or sell locations as they grapple with reduced customer traffic and dwindling sales.Comparative Analysis with Other StatesAside from the local struggles, the downturn in Colorado’s cannabis sector demonstrates critical differences when compared to other states. For instance, California, which has its challenges, has experienced an uptick in cannabis units sold even amidst falling sales trends, showing that not all markets are struggling equally. This has raised questions about what strategies might benefit Colorado’s cannabis market moving forward.Future Predictions: Can the Market Recover?The looming reclassification of cannabis to a Schedule III substance, prompted by directives from former President Trump, offers a glimmer of hope. This change could potentially bring about tax relief and easier access to financial resources for cannabis businesses in Colorado, which may help ease the industry's current burdens. As the federal stance on cannabis evolves, there remains cautious optimism about revitalizing this crucial market.Conclusion: What’s Next for Colorado’s Cannabis Industry?With cannabis sales hitting their lowest points since legalization, the future remains uncertain for Colorado’s cannabis industry. As many operators shut their doors and consumer confidence wanes, it’s crucial for stakeholders to strategize effectively to navigate the challenging landscape. Only time will tell if initiatives aimed at improving market conditions can restore the once-thriving cannabis sector in Colorado.