Colorado just reached a major milestone in cannabis culture. Last month, Colorado became the first state to rake in $1 billion in tax revenues from cannabis. Experts say this unprecedented success can be attributed to the state's consumer-friendly regulations, as well as the undeniable advantage of being a cannabis trailblazer.
Back in 2012, Colorado grabbed headlines as the first state to legalize recreational cannabis. Seven years later, it arguably remains the center of the American cannabis industry. Even though California and other larger markets have also adopted legalization, Colorado still holds the title of the the biggest player in America.
Colorado leads the country with the highest annual cannabis sales per person, which is approximately $280. Its closest competitors are Oregon at $220 and Washington at $130. As a result, cannabis revenues now account for about three percent of the state's $30 million budget, which is directing revenue from cannabis taxes toward education, healthcare, literacy services and drug prevention programs.
Colorado Governor Jared Polis (D) credits the state's strong position in the industry to having the advantage of being the first to legalize recreational consumption.
"We were one of the first states to create a comprehensive approach to the cannabis market," Polis told CNBC. "We built a first-mover advantage into a strong leadership role in America and around the world."
Of course, a number of other factors have contributed to the success of Colorado's cannabis market, according to National Cannabis Industry Association spokesperson Morgan Fox. Colorado has kept taxes relatively low with a 15 percent excise tax and a 15 percent sales tax. In California, cannabis taxes are as high as 45 percent.
"Colorado really embraced the industry, while other states, like Washington, didn't in quite the same way," Fox said. "The regulatory structure is more conducive to business."
Additionally, Colorado embraced cannabis tourism in a way that most other states have yet to do. Between 2013 and 2018 one in four visitors to the state said cannabis was a reason for their trip.
"[Colorado] was more cannabis tourism friendly than Washington and saw a massive influx of people coming in to see what it was all about," Fox noted.
As more states get onboard with legalization and competition continues to heat up, there will be more opportunities for other states to catch up to Colorado's lead. But Governor Polis is confident they'll stay ahead of the rest.
"We have the most forward-looking approach [to cannabis]" Polis said. "And we're going to remain at the center of this growing national industry."