The Colorado Department of Revenue (CDOR) recently released its monthly Marijuana Sales Report for July 2021. According to that report, demand picked up month-on-month, to levels not seen since early spring 2021. While there’s been a good bit of variability in monthly sales in 2021, the last three months have seen medical sales move forward on their average monthly sales for the year at $36.4 million per month. The adult-use monthly sales were $167.8 million — well over 2021 average monthly sales at $156.8 million.
In July, combined retail sales of adult-use and medical cannabis totaled $202.8 million, up by 8.3% from June’s combined revenues of over $187.3 million. On a year-on-year basis, those July 2021 sales, at $202.8 million, are up just 2% from the July 2020, $198.9 million data. Year-to-date, combined adult-use and medical cannabis sales in Colorado, at $1.35 billion, put Colorado on pace to exceed the 2020 total sales, which came in at $2.2 billion.
Adult-use retailers in Colorado tallied over $167.8 million in July, a 9.9% increase over June adult-use retailer sales. Year-over-year, July 2021 adult use retail sales, at $167.8 million, were down 9.1% from July 2020’s monthly figure of $183.1 million. Retail revenues from the adult-use sector expanded by over 24% from 2019 to 2020 but look set to expand by just 6.7% in 2021 if retail revenues keep their current monthly pace.
Medical cannabis revenues in July 2021 came in at just over $35 million, up 1.5% from June 2021’s $34.5 million, but down by 23.6% from the July 2020 figure of $43.3 million.
In the wholesale realm, tax collection data for August 2021 – which corresponds generally to wholesale transfers and transactions executed in July – shows that the 15% excise tax on wholesale activity in Colorado’s adult-use system resulted in nearly $9.5 million accruing to state coffers. August wholesale excise tax receipts are down by 3.9%, compared to tax collections from the previous month, which amounted to just under $9.9 million.
Average Market Rates (AMRs), used by the state to assess the wholesale excise tax on internal transfers of flower, trim, and other plant material between commonly-owned adult-use licenses, increased from June to July. (Since August 2017, AMRs are adjusted quarterly by the Colorado Department of Revenue.) The Q3, 2021 effective tax on internal transfers of flower from licensed cultivation businesses to commonly-owned retailers went up $1 per pound to $1,309 for flower, effective through September 30, 2021. While some AMRs were little changed in July, the tax on bud allocated for extraction jumped by 71.6% to $901 per pound, the retail trim rate jumped by over 20% to $425 per pound and trim allocated for extraction went up nearly 7% to $425 per pound. These changes suggest that the downturn in July tax collections is likely due to less wholesale product being transferred between commonly owned adult use licenses. The table below shows AMRs for all of 2021 with the newly issued October AMR at the top of the table.
The AMR for bud allocated for extraction will fall over 50% to $405 per pound in Q3, but the AMR for trim will rise nearly 24% to $302 per pound, commencing on October 1, 2021.
CDOR calculates AMR for each quarter by averaging the first two months of the previous quarter with the last month of the quarter before, to come up with the AMR for the next quarter. For instance, to find the AMR for Q4, 2021, CDOR averages prices from June 1 through August 31, 2021, thus the average captures part of the previous two quarters in calculating the next quarter AMR.