A new annual report on marijuana industry trends released this week by officials in Denver, Colorado, shows how the local government allocated hundreds of millions of dollars in cannabis tax revenue to public initiatives such as homeless assistance, affordable housing and education during the first decade of legal sales.

While marijuana sales and resulting tax and fee revenues declined for the second year in a row in 2023, the report also showed the continuation of another trend: illegal cannabis activity is declining, further evidence of the potential benefits of implementing a system of regulated sales.

Denver became the first U.S. city to open recreational retailers in 2014 after voters approved a statewide reform initiative in 2012, so the new report is particularly notable because it covers the first decade of legal cannabis sales.

For residents wondering how the city distributes tax revenue from these sales, the report provides a breakdown of where those dollars went in 2023:

• Services for the homeless: $7,950,350
• Affordable housing: $7,533,272
• Malone Funds: $3,737,674
• Education: $3,320,871
• Regulation: $2,360,672
• Enforcement: $2,141,298

About the city of Denver.

Meanwhile, the illegal cannabis trade has steadily declined as the city’s market has developed. Marijuana-related crimes accounted for just 0.2 percent of crimes last year. Law enforcement seizures of illegal marijuana fell from 2,435 pounds in 2022 to 266 pounds last year. And that’s down from 9,504 pounds in 2014, when legal sales began.

The number of break-ins at cannabis businesses also fell from 156 in 2022 to 98 in 2023, which the city says is at least partly due to regulations passed in 2021 requiring secure overnight storage of marijuana and cash.

“As we enter the second decade of legalization, Denver will continue to be a leader in local marijuana regulation,” Mayor Mike Johnston (D) said in a letter accompanying the report. “As more of our national legislators consider proposals to legalize, decriminalize and reclassify marijuana nationally, Denver stands ready to share our lessons learned and recommendations on how the federal government can build on what Denver has created.”

About the city of Denver.

“To understand where we need to go to achieve our goals of equity, regulation, enforcement, and youth education and prevention in the cannabis space, we must also understand the past,” he said. “We hope this report better informs the people of Denver and across the country about the work we are doing in the Mile High City to continue to be the leader in cannabis regulation in the country and deliver on the promise of legalization.”

Overall, cannabis tax and licensing fee revenues declined for the second consecutive year, reaching $48.1 million in 2023, compared to their peak of $72.6 million in 2021.

The report also shows that the number of cannabis licenses decreased by seven percent from January 2023 to January 2024, with most of the decline coming from medical marijuana licenses.

“The number of medical marijuana licenses decreased 12 percent from 385 licenses in January 2023 to 340 licenses in January 2024,” the city said. “This is likely related to the decline in medical marijuana sales, which are at their lowest level since 2011.”

Meanwhile, Denver authorities announced last October that the city had reached a milestone in the marijuana sector: tax revenues from cannabis for recreational and medical purposes had exceeded the $500 million mark since 2010.

The city also formed a working group earlier this year to review local regulations under a statewide law to legalize psychedelics that is currently being actively implemented in Colorado.

In a recent podcast interview, Colorado’s top cannabis regulator looked back at the history of the country’s first recreational marijuana market and noted that she expects lessons learned over the years to inform her office’s approach to establishing Colorado’s new legal psychedelics program.

Separate from the Denver report, a statewide survey released in June found that marijuana use among Colorado youth declined slightly in 2023 — still significantly lower than before the state legalized adult-use cannabis, which was one of the first in the U.S. This contradicts prohibitionists’ arguments that the reform would lead to an increase in underage use.

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Photo courtesy of Philip Steffan.