Colorado raking in record marijuana money again in 2019, but in era of “stabilization” industry leaders look to impact of new legislation

It’s become a predictable pattern in the era of legal recreational pot in Colorado. Every year, the state sets a record for marijuana sales then, 12 months later — poof — it goes up in smoke and another record is set.

It should come as no surprise then that after seeing a record $1.55 billion in sales in 2018, Colorado is on a record-setting pace in 2019.

Through the first three months of the year, combined recreational and medical cannabis sales have totaled a little less than $387 million, more than $21 million ahead of the end of March 2018, with the busy summer sales months ahead. March itself set a record for sales in a single month at more than $142 million. It beat out the previous mark of more than $141 million set in August.

“I honestly just think it’s just more people finding out about it consistently,” said Colin Patrick, general manager of the Eurflora dispensary on the 16th Street Mall. “I think that the word is just spreading. More people tuned onto it every year through education.”

A deeper look at sales data provided by the state shows another trend emerging, however. To put it in a single word, Kristi Kelly, executive director of industry lobby the Marijuana Industry Group, calls it “stabilization.”

RELATED: Turning point for legal marijuana in Colorado: Big changes in the works as state plays catchup

After seeing combined recreational and medical sales rise 46 percent in 2015 over 2014 (the first year of legal rec sales), growth moderated some in 2016, rising 31 percent over the prior year’s total. The same occurred in 2017, with total sales growing just over 15 percent. Finally, in 2018 total sales grew just 2.5 percent over 2017.

“As a new industry, there is obviously going to be exponential growth in the very earliest times, but what we’re seeing is the stabilization of customer demand,” Kelly said of the Colorado market.

Stabilization isn’t necessarily a bad thing. It happens in mature markets. Another one of Colorado’s marquee industries, craft beer, is going through something similar on a national level.

Colorado was the forerunner state for recreational adult-use marijuana, but, as acknowledged this year by industry experts, competition has ramped up as larger states such as California and entire countries such as Canada have embraced recreational weed. That competition made the recently completed legislative session at the state Capitol especially critical from an industry perspective.

A trio of bills passed in the session have big potential to reshape businesses — and drive sales — in the years to come.

House Bill 1090 opens the door for cannabis companies operating in Colorado to become publicly traded and court investment from equity funds. House Bill 1230 creates new business licenses for marijuana tasting rooms and “hospitality” business where people 21 and older can use their own cannabis products outside their private residences. And House Bill 1234 legalizes cannabis deliveries starting with medical products in 2020, with recreational to follow in 2021.

None of the legislation will have an immediate impact on the industry. For one thing, none of the bills have been signed by Gov. Jared Polis yet. Many are counting on Polis’ support, but the industry has seen legislation vetoed by Polis’ Democratic predecessor, John Hickenlooper.

Just one of the bills — the one clearing the way for publicly traded cannabis operators in the state — is set to take effect this year. Its effective date is Nov. 1. The other two are subject to the rulemaking authority of the state’s Marijuana Enforcement Division before taking hold next year. The public rulemaking process brings together groups that include industry proponents, industry opponents, municipalities and law enforcement being assembled to discuss and craft regulations.

“For us, we‘re writing these rules and our hope is to have as few unintended consequences as possible,” said Marijuana Enforcement Division spokeswoman Shannon Gray.

It promises to be a busy year at MED headquarters; the division also has been tasked with streamlining the state’s separate medical and recreational marijuana codes into a single code as part of the so-called “sunset bill” that also passed out of the General Assembly this year.

Of the three house bills, the Marijuana Industry Group’s Kelly expects the public investment legislation to have the biggest impact should the governor sign it, not the delivery or hospitality businesses bills.

She said that legislation “will allow for reinvestment in growth, employees, operations and research and development.”

Kyle Speidell, the co-founder and co-owner of the Green Solution, an industry powerhouse, is excited about what the public investment bill will mean, both for Colorado-based companies like his and the industry at large.

“It’s really focused on legitimizing the industry even more,” Speidell said. “It’s going to bring back the desire to reinvest in the business, to legitimize the retail experience and stores throughout the state.”

Speidell and his brothers, formerly real estate developers, got into the marijuana industry in 2010. Today in Colorado, they operate 18 dispensaries — six of which have opened since the start of 2018 — a products manufacturing facility, and a network of indoor and outdoor grows. They employ nearly 700 people. That doesn’t even touch on their operations in Illinois, Michigan, Oregon, Nevada and Canada.

Billy Koerber works, fixing a display, at The Green Solution’s new downtown dispensary on May 21, 2019 in Denver. (RJ Sangosti, The Denver Post)

With a long history in the industry — and a lot at stake — the Green Solution has thrown its weight into lobbying at the statehouse. Company leaders spoke at committee hearings in favor of the public investment bill. Speidell is already talking about the need to “fix” the hospitality bill. He feels that with no insurance liability cap written into the legislation, insurance companies won’t underwrite new business concepts, and those that do operate will run the risk of major lawsuits if anything goes wrong. He will be keeping a close eye on the delivery bill as it is rolled out, too. That law allows jurisdictions to opt in or out of allowing deliveries in their borders, something that could limit the market opportunity.

Overall, Speidell said he is very pleased with how the legislative session went. With the Hickenlooper administration and its “conservative outlook” gone, he feels Colorado’s cannabis industry is moving into a new era.

“Ultimately, I feel like we’re in a very good place as an industry right now,” he said. “We can use the next few years to learn again about what things are working and what things aren’t.”