Pueblo County, Colorado, is starting to look like the Dixville Notch of marijuana revenue reporting. Pueblo County reported its January results before the state did, and it has done the same for February.
Month over month results are down.
Jeff Tucker of the Pueblo Chieftain reports:
The second month of legal recreational marijuana sales in Pueblo saw three more stores open and $4,000 less in sales tax revenues collected by the county.
Pueblo County Clerk and Recorder Gilbert “Bo” Ortiz said five Pueblo County stores delivered $28,724 in sales tax to the county late last week, representing roughly $820,000 in total sales for the month of February.
. . .
The state collects both of those taxes and those totals won’t be official until the state issues a report sometime next month.
But based on what the county collected from its own tax, it stands to gain about $49,000 from the sale of recreational marijuana in February.
In January, the county collected $32,643 in county marijuana tax from just two stores and brought in a total of about $56,000 from all marijuana sales tax sources.
It may be that the novelty of legal weed has worn off a bit from its historic first month, but Ortiz said it will be difficult to make any real predictions or analysis until after the county has a full year under its belt.
Folks hoping for marijuana revenue pointed to the opening of more stores as a positive. Maybe in Pueblo, the positive of more stores was trumped by loss of novelty, or one-time tourists. Most likely, the sample size is too small to be useful.
But the “new stores” argument doesn’t get me far, because new stores new need customers, and new (post-January) buyers of recreational marijuana could plausibly come from three categories: (1) switchers from the medical market to the recreational market, (2) switchers from the black market to the legal market, and (3) former non-consumers. I don’t see how new stores add to the number of customers (or more precisely, sales) in any of those categories other than at the margin. [UPDATE March 28: But new customers could come in from any category because legal supplies were low – and as legal prices drop.]
UPDATE: 2:10 p.m. Eastern: January sales could be abnormally high because consumers bought several months’ supply when legalization started. And a friend writes: “I imagine that the stores are having supply issues . . . it’s about a 3 to 4 month long growing cycle, so when those first big harvests are ready in the next month or so, we’ll probably see that there is more supply, prices go down, and more purchases are being made.” In that case, sales measured in ounces will go up for sure, but the price declines will work to bring sales measured in dollars and taxes down. The net effect could bring in more revenue or less. [UPDATE March 30: Colorado will recalculate “average market rate” for the period starting July 1 — and that may reduce the tax rate from its current 62 cents per gram of flowers and 10 cents per gram of trim. Colorado’s switch, de facto, from percentage to weight is covered elsewhere on this blog.]
2:40 p.m. Commentor “john_downs” at this site points out that February has fewer days than January – enough to make the results basically flat. “[T]he county will make 8.8% less tax revenue by the month, but the month of February has 9.7% less days than January so it is still a gain in revenue per day. Sounds like an increase to me.” I would calculate revenue at $28,724 divided by $32,643, for 88 percent, or 12 percent less revenue and sales, but the point about days is valid.
3:51 p.m. Earlier posts on this blog look at how Colorado numbers might play out in light of early results.