The Colorado Department of Revenue released its annual report on the nation’s first market for recreational marijuana products. Alongside Washington, Colorado was the first state in the US to legalize recreational marijuana. Of course, the discrepancy between state and Federal laws still create difficulties for merchants, but the market is growing at an impressive rate. According to numbers from the report, almost 150,000 pounds of cannabis flowers were sold last year. An indication of a healthy and growing market.
During the 2014 year, the number of licensed businesses for recreational marijuana doubled from 400 to over 800. Of course, the term ‘businesses’ in this context is comprehensive of retailers, cultivators, testing laboratories, and infused product manufacturers. The healthy market is growing competition at a healthy rate as merchants continue to capitalize on this in-demand market. The number of medical marijuana dispensaries also increased, though at a much smaller rate.
However, despite the increase of businesses receiving licenses, the medical marijuana market still vastly out reaches that of the recreational market in the state of Colorado. Of the nearly 150,000 pounds, approximately 100,000 still belonged to the medical marijuana market constituting two thirds of the entire supply within the state. The disparity comes from the established nature of the medical market compared to the state’s brand new recreational industry, pioneering not only the state but the nation as a whole. The disparity isn’t helped by the disparity between state and Federal laws either.
Due to marijuana still being banned by the Federal government, the industry remains high risk for merchants. Finding a bank to accept and handle a merchant’s marijuana payment processing remains next-to-impossible. This forces many merchants to find payment processing to avoid being a cash-only business in alternative places that do not balk at the legal risks associated with the industry. As long as the difference exists between state and Federal law, merchants will always be under threat of overzealous Federal prosecution, and therefore banks and traditional financial institutions will back away from providing payment processing for credit and debit transactions.
Colorado is more than an experiment for the functionality of recreational marijuana markets. The growth and success of the Colorado markets indicate that the market may be here to stay. As merchants find more alternatives to the complications and difficulties of doing business, businesses will continue to grow as the recreational marijuana industry continues to develop past its infant stages.
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