Retail marijuana sales are down this year in Durango, and dispensary managers have two ideas about what might be happening: First, sales spiked during the height of the pandemic and Colorado is now seeing a return to normal and second, New Mexico began selling retail marijuana this year, resulting in fewer New Mexicans traveling here for their supply.
Cannabis has been a booming industry in Colorado since recreational use was first allowed in 2014. It has raked in over $13 billion worth of sales and over $2 billion worth of sales tax revenue for the state.
In 2021, Colorado cannabis sales reached a record high with about $2.23 billion in sales tax revenue. But this year has been slower, bringing in about $1.2 billion in sales tax revenue so far statewide.
In La Plata County, cannabis sales have also slowed. Data from the state shows La Plata County reported about $30.1 million in retail sales during the first eight months of 2021 whereas the county reported about $24.4 million through eight months in 2022.
In Durango, marijuana sales netted $499,295 in sales tax for the city of Durango in 2021 compared with $353,586 during the first 10 months of this year.
Durango Chamber of Commerce Executive Director Jack Llewellyn said New Mexico legalizing recreational marijuana is likely the leading cause for plummeting sales in Durango and La Plata County.
While only a small number of people commute to Durango for cannabis purchases, he said it still represents a decrease that could impact sales for local marijuana shops as well as other Durango businesses.
“When people come to Durango for marijuana purchases, they may visit one of their favorite stores, restaurants or may even stay overnight, so I think there is a multiplier effect there,” Llewellyn said.
Durango marijuana dispensary managers say they have noticed the decrease in sales this year.
Telluride Bud Co. Assistant Manager John Rivas said sales have declined 20% to 25% since New Mexico began allowing recreational use of the drug.
He said he’s not concerned about the reduced sales because Durango still has lower cannabis prices and it makes for a better buyer’s market.
“They have to grow on their own and they’re just starting,” he said. “You’re talking ounces that average from $350 to $400, whereas in Durango, ounces are on average are about $150 to $250.”
Considering Durango’s high number of visitors from Texas, Rivas is curious to see what would happen if Texas were to legalize marijuana.
New Mexico began selling retail marijuana in April. Since then, local sales have taken a hit, according to the numbers. In April through August 2021, La Plata County marijuana sales brought in around $19.6 million whereas sales from 2022 during that same period show about $14.6 million in sales, or a 26% decrease.
That aligns with Rocky Mountain High manager Ken Aab’s estimates. He said the shop saw experienced a 15 to 20% decrease in sales when New Mexico began selling recreational marijuana. But he noted other factors have led to a near 50% decrease in sales this year.
He also noted that tourism increased during the pandemic, and that might have driven an uptick in sales in 2020 and 2021.
Aab also noted that out-of-state customers tend to be high-dollar purchasers, and losing some of those customers could contribute to lower sales numbers. He considers any purchase over $100 to qualify for that category.
He said gas prices may also be playing a role in fewer people visiting Durango from outlying areas to make their purchases.
“If we were at $2.50 a gallon, does that mean more people would drive up, or I would see less of a fall off? I’m sure that’s at play,” he said.
Aab also points out that it’s illegal to cross state lines with cannabis, making some consumers from New Mexico hesitant to come to Durango when they can now purchase it within their own state.
Kennan Goebel, manager of The Green House in Durango, said unemployment and stimulus checks given out during the pandemic played a role in the increased sales during 2021.
Goebel said the dispensary had record sales during the pandemic. He said about 35% of The Green House’s customers come from out-of-state.
He said Durango is becoming a saturated market, which is driving marijuana prices down.
“We have such a surplus here in Colorado, it makes it easier for things to be cheap from concentrates to edibles to flower,” he said.
He said The Green House may see fewer out-of-state customers over the next few years because visitors from states like Texas could go to New Mexico for their cannabis experience. However, if prices in New Mexico don’t decrease, then Durango dispensaries should maintain that customer base.
Aab said visitors from nonlegal states are still likely to visit Durango and buy marijuana simply because it is an appealing tourist destination.
The Green House has a store in New Mexico and business has been slower than expected. Goeble said that could be a result of some well-known retail products like Wana and Bonanza edibles not yet being available in New Mexico.
“I think slowly within this year and next year we’ll start seeing more name brands going into that state, especially with the way the market is anticipated to go,” he said.
While New Mexico’s laws may be hindering Durango’s cannabis business, some shop managers are happy other states are joining the legalization movement, and others are hoping for federal legalization.
“I’m shocked that we’re still having these conversations,” Aab said. “I thought we would have federal legalization squared away already.”
He said if marijuana was federally legalized, the market would balance out and each state wouldn’t vary as much on price.
Goebel said people are generally happy about more states legalizing cannabis.
With New Mexico lifting the ban, recreational marijuana can now be legally purchased in 19 states.
“I think someone who runs and owns a store, it could be a bit of a nail-biter because you don’t know what the next year could hold,” he said. “But at the same time, I think everyone gets a pretty good equal share of the pot.”
tbrown@durangoherald.com
