{"id":36656,"date":"2022-12-22T11:14:41","date_gmt":"2022-12-22T18:14:41","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/the-cannabis-industry-is-facing-its-longest-downturn-yet-with-no-end-in-sight\/"},"modified":"2022-12-22T18:14:41","modified_gmt":"2022-12-22T18:14:41","slug":"the-cannabis-industry-is-facing-its-longest-downturn-yet-with-no-end-in-sight","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/the-cannabis-industry-is-facing-its-longest-downturn-yet-with-no-end-in-sight\/","title":{"rendered":"The cannabis industry is facing its longest downturn yet, with no end in sight"},"content":{"rendered":"\n

\"Matt
Matt Huron, owner of Good Chemistry Nurseries, in his grow facility in Denver's Northeast Park Hill neighborhood Dec. 20, 2022. (Kevin J. Beaty\/Denverite)<\/span><\/figcaption><\/figure>\n<\/p>

Overbuilt and overgrown, Colorado\u2019s cannabis industry is now facing a major shakeout.<\/p>\n

Pandemic-fueled demand has evaporated just as new grow operations flood the market with cannabis. It has turned what had been unending growth into the industry\u2019s first downturn.<\/p>\n

Since recreational cannabis started in 2014, sales had never declined on a year-over-year basis.<\/p>\n

But starting on July 2021, the industry has logged 17 straight months of decline.<\/p>\n

Prices for recreational flower have dropped 23% over the last 12 months, and they don\u2019t look likely to rebound anytime soon.<\/p>\n

\u201cBlack Friday used to be a big day for us,\u201d said Christopher Stefan, who specializes in cannabis real estate. \u201cAnd it hit with a thud this year. We\u2019ve talked to multiple retailers,\u201d and they just aren\u2019t seeing customers materialize.<\/p>\n

About $1.5 billion worth of cannabis has been sold through October in Colorado, down 21 % from the same period in 2021, a decline of more than $400 million.<\/p>\n

That affects not just businesses, but governments. Tax and fee collections are down more than $90 million this year, according to the Colorado Department of Revenue. State budget experts are watching the declines closely \u2013 the taxes fund everything from school construction to addiction treatment.<\/p>\n

During the pandemic, demand surged, as Colorado went into lockdown. Investment rushed into the industry, in particular into new production, grow houses.<\/p>\n

\u201cI think like everyone saw the lines around the corner, cannabis is pandemic-proof, right?\u201d said Matt Huron, the owner of Good Chemistry Nurseries, which grows and sells cannabis. \u201cWell, it takes a good year and a half to build one of these things. It takes probably at least two years if you know what you\u2019re doing to build it, get through the inspections, get open.\u201d<\/p>\n

The problem is many of those grows finally opened just as vaccines became widespread, and weed lost some of its appeal as people weren\u2019t just sitting at home streaming Netflix anymore.<\/p>\n

Then the closure of Buddy Boy, a chain of marijuana stores, caused concern throughout the industry.<\/p>\n

\u201cIt was a little bit of a shock, to be honest with you,\u201d Huron said. \u201cI mean, they\u2019ve been around a long time.\u201d<\/p>\n

Stefan, the cannabis business broker, said more could be coming.<\/p>\n

\u201cI\u2019m afraid really just grows and businesses are gonna have to shutter,\u201d Stefan said.<\/p>\n

It is a stunning turn of events from the pandemic when businesses were expanding rapidly and courted by big-money investors. Now many are unraveling.<\/p>\n

\u201cNow you\u2019re meeting with lawyers all day and you\u2019re fighting your partners and your best friends,\u201d Stefan said.<\/p>\n

A lot of this is also happening in the rural parts of Colorado.<\/p>\n

Denver is the largest grower of marijuana, accounting for 41% of all cultivated plants in the state. But many city warehouses slowed production as demand began to fall. It wasn\u2019t enough. Growing operations all around the state came online. Before the pandemic, there were 15 counties in Colorado growing cannabis. Now there are 24.<\/p>\n

Crowley County, east of Pueblo, is a prime example of the boom, and the bust. The county has 6,000 residents, about half are inmates at the local private prison. It had little in the way of an economy, and county leaders decided, back in 2016, to allow cannabis production.<\/p>\n

\u201cIt\u2019s still a pretty sore subject in the county, being mostly right-leaning county,\u201d said Roy Elliot, a Crowley County commissioner. \u201cA lot of people aren\u2019t too fond of marijuana grows.\u201d<\/p>\n

Still, the grows were a boon to the county budget. County tax revenue from cannabis last year was about $1.3 million.<\/p>\n

But Elliot says many grows have closed permanently.<\/p>\n

\u201cA lot of \u2019em still have a decent amount of product sitting around from either this fall\u2019s harvest from outdoor grow, some of \u2019em have product from last year\u2019s (harvest).\u201d<\/p>\n

State records show that about 42,000 plants have been cultivated in Crowley County this year.<\/p>\n

\u201cIt hit that boom after (COVID-19), and I think too many people got into it,\u201d Elliot said. \u201cAnd like any other new industry, when it first shows up, they gotta find that sweet spot. \u201d<\/p>\n

But in Denver, Matt Huron believes the marijuana business has matured into something like the restaurant industry. He hopes that, like restaurants, he can distinguish his product on quality, by growing proprietary marijuana strains he\u2019s spent years perfecting.<\/p>\n

\u201cThere are restaurant groups that open up in competitive markets do very well,\u201d Huron said. \u201cAnd then there\u2019s a gazillion other guys that open up a restaurant and they\u2019re out of business in a year. And that\u2019s really what the cannabis industry is now.\u201d<\/p>\n

\"Good
Good Chemistry Nurseries' grow facility in Denver's Northeast Park Hill neighborhood Dec. 20, 2022. (Kevin J. Beaty\/Denverite)<\/span><\/figcaption><\/figure>\n<\/p>

To read more stories from Colorado Public Radio, visit www.cpr.org<\/em><\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

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