CANNAINVESTOR Magazine Premier Issue April/May 2016 - Page 50

The leader in cannabis business intelligence and market share tracking Colorado and Washington State Cannabis Sales Set the Tone for Rapid Growth March 31, 2016—The na1on’s first two legal cannabis markets, Colorado and Washington state, began adult-use (non-medical) sales in 2014. Consumers responded enthusias1cally, with Colorado grossing $305 million and Washington $134 million in their respec1ve first twelve months, according to Boulder, CObased BDS Analy1cs’ GreenEdge™ retail sales tracking technology. Colorado sales began Jan. 1 and Washington started in July. Early on, Washington’s grow opera1ons, which legally must have separate ownership from retailers, received state cer1fica1on too late to produce quan11es sufficient to meet demand. Prices spiked and sales started slowly—Washington’s first-month sales of $1.5 million were dwarfed by Colorado’s $14.7 million. Washington sales grew quickly from that small start, adding 28.4% on a compounded monthly basis through June 2015. But from June to December last year, that rate slowed to 7.6% per month. Oregon began selling adult-use cannabis in the fall and likely pulled some of its border-hopping customers back from Washington. And of course exponen1al growth is not sustainable beyond a limited ini1al period. But the state’s cannabis sales will con1nue to grow at more modest rates. S1ll, Washington’s adult-use sales are less than two-thirds of Colorado’s. In the final six months of 2015, sales totals were $215 million to $323 million, respec1vely. In all of 2015 Colorado dominated adult-use retail sales with $588 million to Washington’s 318 million. Average selling price (ASP) at retail dropped steadily in Washington beginning in September 2014, soon a^er legaliza1on. By contrast, Colorado’s prices rose slightly over 1me a^er early fluctua1ons. In Colorado’s second quarter of sales, ASP averaged $9.90 per gram or unit (depending on the product). By Q4 2015, that average rose to $12.33. Washington’s 1ght supply pushed its ASP up to $15.48 in its second quarter of sales, but prices fell below Colorado’s average in March 2015 and reached $9.31 in Q4. A shi^ in Washington’s marijuana tax policy is partly responsible for these ASP changes. Effec1ve July 2015, the state ceased taxing wholesale suppliers’ transfers to retailers and shi^ed the burden to retail customers as a sales tax. BDS Analy1cs reports the pre-sales-tax price of products sold at retail. Previously, the wholesale excise tax was reflected in the retail price paid by the consumer, but with the tax shi^ing to a more tradi1onal sales tax, that is no longer the case. Sales and Average Selling Prices (ASPs) Sales Colorado and Washington, adult-use monthly retail revenue, 2014-2015 $60 million CO Sales $40 million CO ASP $25.00 $20.00 WA ASP ASP WA Sales $15.00 $10.00 $20 million $5.00 $0 million $0.00 ©2016 BDS Analy1cs Source: