October 29, 2018

Colorado Production Outpacing Sales in First Half of 2018


The Colorado Marijuana Enforcement Division (MED) recently published its 2018 Mid-Year Update, which contains licensing, production, sales, and other data for the first six months of this year. Overall, both the production and sale of flower have leveled off and are comparable to the first half of 2017, although the former continues to outpace the latter by a significant margin. Additionally, increased sales of concentrates and infused products indicates that greater proportions of Colorado’s production has been devoted to extraction and product manufacturing.

In terms of licenses, the number of adult-use cultivation licenses at the end of the first half (H1) of 2018 was 744, up from 692 at the end of June 2017. However, the number of active licenses for medical cultivation facilities decreased in the same span, from 765 to 725.

The total number of plants cultivated statewide has increased this year. According to the MED, on average, an additional 40,656 plants were grown monthly during the first six months of 2018, relative to the same period the year prior. As in the first half of 2017, the number of plants being grown in Colorado increased in each month of the first half of this year, reaching 1,062,765 by June 2018. That figure represents an increase of 7% compared to the number of plants being cultivated in June 2017.

Based on available data, it appears that the amount of dried plant material produced by licensed Colorado growers increased by an even smaller proportion. Production figures were not included in the MED’s 2017 Mid-Year Update, but were published in the full 2017 Annual Update compiled by state regulators. Through the first half of 2018, Colorado cannabis farmers generated 455,630 pounds of flower and trim – 305,732 pounds of the former and 149,898 pounds of the latter. The combined total is 52% of the volume produced in all of 2017, which was just under 878,000 pounds of flower and trim.

Sales volume of flower similarly grew by a small magnitude in H1 2018 relative to H1 2017. Through the first six months of this year, general consumers and patients in Colorado purchased over 202,000 pounds of flower, up by 1.4% compared to over 199,000 pounds purchased from January through June of 2017.

Despite both production and sales volume of flower holding fairly steady year-over-year, it must be noted that the amount of flower produced through the first half of this year exceeds that purchased by 51%. The excess flower production recorded so far in 2018 is on top of production volume surpassing that of sales by 35% in 2017. Such supply and demand dynamics are largely responsible for the overall downward trend of the Cannabis Benchmarks Colorado Spot Index that has been observed both last year and so far in 2018.

As noted above, while tens of thousands of additional plants were grown monthly in Colorado in H1 2018 compared to H1 2017, production of dried flower is up only slightly. It appears that a significant portion of the increased plant counts are being sold to extractors as wet whole plants. The MED’s report shows that 98,602 pounds of wet whole plant material were produced in the first half of this year, which is 81% of the total of such material generated by licensed growers in the entirety of 2017.

Increased demand for concentrates and infused products appears to be driving Colorado businesses to devote more plant material to extraction and product manufacturing. Whereas demand for flower in the first half of 2018 was largely stable compared to the same span the year prior, the MED report states, “When comparing the first six months of 2017 to the first six months of 2018, the monthly average of units sold (medical and adult-use combined) for both edibles and concentrates increased by 13.8% and 94.6%, respectively.”