An Overview of Colorado’s Recreational Pot Market

Jan 13, 2014


Colorado is the first jurisdiction anywhere in the world to have a legal, regulated marked for recreational marijuana.  20 other states, and Washington, DC, allow the use of medical marijuana, but how does Colorado’s marijuana market function?  The Economist explains:

  • Amendment 64 sets the guidelines, including maximum tax rates and the rights of cities and counties to exclude pot shops from their jurisdictions.  However, details were up to state officials and legislators. 
  • Colorado’s well regulated medical-marijuana system provided the foundation for the recreational industry.  Only licensed medical outlets “in good standing: can serve recreational customers.
  • Colorado has a “vertical integration” system.  Retailers must cultivate most of the product themselves.  This rule makes state monitoring easier and is in place until October 1. 
  • Prices are set at one analyst calls the “Goldilocks point.”  If the price is too low excessive consumption and out of state exports increase; too high and the market will seek product from illegal dealers.  The current price for good recreational marijuana is $250-$300 an ounce.  Medical marijuana costs significantly less.
  • Recreational weed is subject to hefty taxes:  a 15% excise tax levied on "average market rate" and a special 10% sales tax (the state's general 2.9% sales tax will also apply).
  • Buyers/consumers must be over age 21.
  • Recreational marijuana can only be used on private property with consent of the property owner.
  • The recreational product cannot be transferred across state lines.
  • Residents can purchase an ounce at a time, out-of-staters a quarter-ounce.
  • Residents can grow up to six plants at home.  They can give the product away, but cannot sell it.

The complete rule book has 136 pages.

Marijuana is still illegal under federal law.  James Cole, the Colorado deputy attorney-general, issued a memo late last summer suggesting the federal government allow experiments in Colorado and Washington to continue as long as they do not impede “enforcement priorities.”

Legalization has affected neighboring states.  Colorado-sourced medical marijuana has been showing up, and a Kansas entrepreneur just started a weekend shuttle service from Salina to Denver reported the Salina Journal

Bart Allen, former candidate for sheriff, will transport people in his 12-passenger Mercedes van.  Allen says his target customers are over 45 years of age with medical conditions.