Aspen, Colorado’s 2017 year-end sales tax report is in, and it shows cannabis sales surpassing alcohol sales for the first time when compared to off-premise sales. cannabis sales represented $11.3 million of Aspen’s combined retail sales of $730 million in 2017, a 16% increase over the previous year. Alcohol, meanwhile, maintained at $10.5 million for the year. Aspen is a small resort town of 7,000 residents that sees tens of thousands of tourists pass through each year. Almost half of it’s $730 million in retail sales was spent at hotels, restaurants and bars. Although $11.3 million may not seem like a significant portion of that total retail number, consider that cannabis’s one year, 16% jump was the largest among all of Aspen’s retail sectors. The town has six cannabis dispensaries and just five liquor stores. When recreational cannabis was first legalized in Colorado, the concern in the alcohol industry centered on decreased retail sales in direct response to the new industry’s growth. At least in Aspen, that has not proven to be true. As cannabis sales have increased, alcohol numbers have remained steady year to year. The alcohol industry remains strong and has surpassed cannabis sales in the area a few months out of the year. However, the sales trend in Aspen may not hold true nation-wide over a longer period of time. A Georgia State University study of alcohol sales in 2,000 counties across the US revealed a 15% drop in sales of alcohol nation-wide over the last ten years, a period that coincides with the rise of legalized medical and recreational cannabis throughout the country. Other studies have found strong evidence that alcohol and cannabis act as substitutes for each other among consumers, which by consequence would see the growth of legal Cannabis negatively impacting alcohol sales. Overall, there is also a marked difference between on and off premise alcohol sales records with on-premise sales from restaurants, bars and hospitality venues holding on a more steady pace.
Rapid Growth Expected in Florida
Despite restrictions built into Florida’s medical cannabis law, some analysts believe the state’s cannabis market will experience high revenue in it’s formative years. The most optimistic report comes from the “The State of Legal Cannabis Markets,” an annual publication put out by BDS Analytics and The Arcview Group. The report estimates that Florida’s cannabis sales will surpass $1 billion by 2020. Of course, other reports balance these projects and report less notable revenue predictions. The analysts do admit that this number is based on the loosening of the state’s restrictions, compelled by the public’s growing acceptance of cannabis use. Right now, Florida limits use to only diagnosed qualified patients and also limits the forms in which cannabis could be sold and ingested to oils, extracts and concentrates. The limited use law rules out smoking or cannabis infused edibles like baked goods and candy. Production and distribution rules also limit what brands a dispensary can sell, which may impact competition and growth. Regardless of the restrictions, BDS and Arcview are not the only analytical groups predicting big things for Florida’s infant cannabis industry. Other studies place 2020 sales at half a billion to a billion dollars. It seems the only thing left to be seen is how and if Florida law will change to accommodate the potential growth. Still, investors have plenty of homework and analysis to complete before jumping to invest in this new market.