Back in 2012, when the first states legalized marijuana, it was a challenge to disprove dissenters. It was more a strong gut feeling than anything else.
“But just wait,” I said. “I’ll say I told you so before long…”
Well, today is that day.
An article by Julie Wernau came out yesterday in the Wall Street Journal. It’s called “The Rise and Fall of the ‘Nappa Valley of Cannabis.’” It sends a clear message: legal marijuana is caught in the midst of a brutal crisis.
Her story tells the tale of Pueblo, Colorado, a town that centered its economic hopes around legalized marijuana. Wernau explains how the geography of this town in the Colorado plains held the perfect layout and location to establish itself as a leader and destination for pot enthusiasts to come and enjoy the fruits of the land, a Garden of Eden (or Weeden).
Local politicians set their sights on promoting dispensaries, pot farms, fertilizer companies, hydroponics stores, greenhouse complexes, and all the rest. And they did just that.
The register rang in 2014, the sound of the county’s first legal weed sale. People lined up around the block to buy their nuggets of gold. For a while, the tax revenues reflected the town’s population, high.
A lot of people scoffed at me during this period. And although I can admit when I’m wrong, I stood my ground. From everything I heard, saw, and smelled, it looked like the industry would, and could, not last.
Fast forward ten years. Wernau’s account explains how Pueblo went full-bore into the industry. By 2017, the country had 200 pot-related businesses. Take a stab at how many remain…Forty-five.
Country tax revenue dwindled, falling from $7.1 million in 2021 to $4.8 million in 2023. In 2024, revenues dipped below $4 million.
So what happened? I’ll tell you what didn’t happen. People didn’t put down their bongs and pick up Bibles instead. There wasn’t some Wesleyan revival. You can still smell the weed smoke that sticks to the cool Pueblo air.
In fact, according to Federal surveys, national pot usage has never been higher.
Let’s ask again: What happened? Simple economics happened.
Despite mountains of evidence, I still receive pushback for pointing this out, but the market dynamics of legalized marijuana cripples itself. Even after legalization, the nature of the business, along with careless oversight, allows illicit operations to fly under the radar and thrive.
How do I know this? Look at the numbers. Last year, according to the leading cannabis research company Whitney Economics, illicit black market operations accounted for 75% of the U.S. cannabis market. Furthermore, research shows that only 24.4% of the legal operations in the United States are profitable. That’s down from 42% in 2022.
What I saw on the horizon was an industry that made it glaringly easy to duck taxes, avoid red tape, and dodge quality control. There was little-to-no planning to enforce and monitor these companies. It was merely a ploy for easy and fast tax dollars, and they got them for a time. But now, we’re reaping exactly what we sowed.
The dreams of this quaint and prosperous cottage industry that caters to locals and tourists have been dashed. At least now we can see it for what it is, but that hasn’t stopped supporters from backtracking and trying to change the narrative.
Now, proponents of legalization are trying to rewrite history. “We never said it would save the economy,” I hear them say.
Bullshit. People attempted to hawk this bill of goods for decades. You got local, state, and federal officials on board, saying that it would lead to some bud-fueled utopia. What we have is a wreck.
The article quotes the Pueblo police chief who explains that the problems with cartels and gangs have only worsened in the county since legalization. And so many of the businesses have liquidated, disappeared, or gone to the black market.
Can we just admit that this was nothing more than a botched science project? That this was rushed, irresponsible, and predictable? That it wasn’t a goose to lay us a golden egg, it was a grass-fed chicken that’s coming home to roost.
H/T: www.audacy.com
