The party is over, and the buzz is wearing off. Mature legal cannabis markets are experiencing a slowdown in sales since the pandemic boom.
A new report from cannabis data firm Headset said the industry in established marijuana markets, such as Oregon and Washington, has slowed down from a year ago. For example, Colorado's market recorded sales that dropped 11.4% in June from a year ago.
"What we saw in 2020 was a massive spike in sales tied to the pandemic as people stayed home, had government stimulus money, and not a lot to do," Chris Wash, CEO of Marijuana Business Daily, told CNBC.
Headset noted marijuana sales spiked between March 2020-21, with monthly average year-over-year sales of around 25.8% in Colorado. But sales began sliding last year as people returned to work and stimulus checks ran out. The report found the number of purchases and amount of money people spent declined.
In July, customers spent an average of $55.21 per visit at Colorado stores -- four dollars less than the average of $59.73 in July 2021, according to the data.
"Right now, the Colorado marijuana industry is going through the largest downturn that we've ever seen," Truman Bradley, executive director of the Wheat Ridge-based Marijuana Industry Group, told the local media outlet 9News Denver.
Even though marijuana sales are normalizing in mature markets after a pandemic-fueled party, the industry nationwide is expected to grow as new markets come online. Marijuana Business Daily expects US medical and recreational cannabis sales could exceed $33 billion this year, up from $27 billion last year. Forecasts for 2026 are around $52.6 billion.
So why are sales slowing in mature markets? Well, these states were the only ones open for business during the pandemic, and when tens of millions of Americans were out of work or forced to stay home because of the government shutdown, there was nothing better to do than sit on the couch, consume marijuana, and watch Netflix. Now that people aren't stuck at home, they aren't purchasing as much cannabis, and producers have to readjust production levels lower due to declining demand.
One exchange-traded fund tied to the cannabis sector, called ETFMG Alternative Harvest ETF (MJ), has plunged more than 84% since the February 2021 peak of $33.
The buzz is over.