In Colorado, legalization of recreational marijuana sees an increase in sales of medical marijuana

Pat Oglesby reports on a surprising piece of data in Colorado.  Not only is medical marijuana outselling recreational marijuana, medical marijuana sales have (so far) increased under legalization:

In Colorado, recreational marijuana is making the news, but medical marijuana is dominating the market.  The state officially reports that in February, medical marijuana outsold newly legal recreational marijuana better than two to one.  And medical sales are growing more than twice as fast.

 

Taxes may explain the popularity of medical marijuana.  Medical marijuana bears only a 2.9 percent sales tax.  Recreational marijuana bears, along with that 2.9 percent sales tax, another 10-percent retail tax.  

 

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Not only are sales of medical marijuana outpacing recreational sales, they are growing faster. Medical marijuana sales taxes in January were just $$31,500,655. February’s $35,247,448 in medical marijuana sales represents a 11.9 percent increase. Recreational sales grew by only 5.2 percent.  So the share of medical sales are growing faster than recreational sales — about 2.29 times as fast.

Given the different tax rates, it makes sense that Coloradans who had medical marijuana cards before legalization would continue to buy medical marijuana after legalization.  But why would legalizing recreational marijuana increase medical marijuana purchases?

After all, since getting a medical marijuana card in Colorado isn’t all that difficult, we might imagine that most regular users (who account for the bulk of marijuana that is used) would have already had medical cards before legalization.  

My own guess (and it is entirely a guess) is that the increase in medical sales is likely being driven by the segment of regular users who had never gotten a card because it seemed like more trouble than it was worth (and/or they were worried that getting a card would put them on some sort of list that could become public.)  The sort of person I’m envisioning would have had a regular black market dealer and figured “why bother getting a card.”  

After legalization, however, these folks started wandering into the newly established recreational stores for their purchases.  And when they did, they found two counters: the recreational counter and the medical counter, where the same products were much cheaper becuase of the tax difference.  Once they realized how much money they could save, getting a medical marijuana card suddenly seemed well worth the investment.  

Of course, my guess may be completely off-base.  It might turn out, for example, that the increase in medical marijuana sales is being driven primarily by existing medical marijuana consumers who’ve increased their consumption (e.g., a medical marijuana user who bought X grams/month before legalization, increasing their purchases to 2X grams/month after legalization.)  

In any event, if this trend continues, it is something that will be well worth studying closely.