The Colorado Department of Revenue (CDOR) recently released its monthly Marijuana Sales Report for March 2020. Total retail demand jumped from February to March by a significant magnitude, as has come to be expected based on prior trends. However, the month-over-month increase this year was notably smaller than those observed in the same period in the previous three years, suggesting that consumers may have been stymied from going out and purchasing cannabis due to COVID-19, which began to impact Colorado in mid-March. However, medical cannabis sales in March climbed to their highest level in over a year, indicating that patients increased purchasing, possibly to avoid potential infection. Still, wholesale prices in the state persisted in sliding downward in March, a continuation of a trend that originated at the outset of December 2019.
In March, combined retail sales of adult-use and medical cannabis totaled over $161 million, up by 15.2% compared to February’s combined revenues of over $139.7 million. While significant, this year’s proportional increase in cumulative monthly sales from February to March is of a significantly smaller magnitude relative to those documented in the same span in prior years. From February to March 2017, total retail revenue rose by 22.1% month-over-month; it increased by 20.2% in the same span in 2018; in 2019, total sales grew by 19.3% from February to March.
March 2020’s cumulative sales total represents an increase of 13.1% year-over-year. Through the first three months of 2020, Colorado medical and adult-use retailers have racked up a combined sales total of over $440.6 million, up by 14% compared to over $386.6 million in total year-to-date sales through the same period last year. Both figures are down from February 2020, when total monthly sales were up 17% from the year before and year-to-date revenue was up by 14.5%. Still, sales growth so far in 2020 continues to outpace that observed in 2019, when total retail sales increased by over 13% from 2018.
Adult-use retailers in Colorado tallied over $128.1 million in March. Revenues from the state’s adult-use sector in March were up by 14.3% compared to the over $112 million in retail sales generated in February. Similar to total sales, adult-use revenues typically jump in March, and did so by a larger magnitude last year, of 19.9%. March 2020’s adult-use sales are up 12.1% from those documented for the same month in 2019. In 2019, annual revenue generated by recreational retailers grew by 16.2% compared to the year prior.
Medical cannabis revenues in March came to over $32.9 million, up by 18.9% from the almost $27.7 million in sales tallied in February in that section of the market. March 2020’s medical cannabis sales are the highest monthly revenue figure from that segment of the state’s market since October 2017, indicating that registered patients stocked up ahead of coronavirus-related restrictions being put in place. Retail sales in Colorado’s medical market in March 2020 are up 17.2% year-over-year, relative to almost $28.1 million in March 2019.
In the wholesale realm, tax collection data for April 2020 – which corresponds generally to wholesale transfers and transactions executed in February – shows that the 15% excise tax on wholesale activity in Colorado’s adult-use system resulted in over $7.09 million accruing to state coffers. April’s wholesale excise tax receipts are up by 8.9% compared to tax collections from the previous month, which amounted to almost $6.51 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 were unchanged from February to March. (Since August 2017, AMRs are adjusted quarterly by the Colorado Department of Revenue (CDOR).) The increase in receipts from the 15% excise tax on wholesale transfers and trades in the state’s adult-use sector indicates that such activity expanded in March relative to the month prior.
However, April’s collections from the wholesale excise tax are down compared to February’s (which correspond to trading in January), when the same AMRs were in effect. This is in line with trends from prior years and indicates that COVID-19 – and accompanying restrictions and adjustments to the operations of retailers – did not result in significant changes to wholesale trading habits, at least in March. In other words, it does not appear that retailers looked to stockpile product in anticipation of higher sales, nor did they spurn the idea of bringing in new inventory.