Colorado’s cannabis market continues its downward spiral, with wholesale flower prices tying historic lows even as a quarter of cultivation facilities have shuttered over the past two years. The state’s Average Market Rate (AMR) for retail marijuana flower dropped to $649 per pound for the fourth quarter of 2025, matching the record low set in summer 2023.
This price collapse comes amid a dramatic industry consolidation. According to Westword, Colorado has witnessed a 25% reduction in licensed marijuana cultivators from September 2023 to September 2025. Yet despite this significant supply correction, prices refuse to rebound, suggesting deeper structural issues plaguing the legal cannabis market.
The current wholesale rates, effective through December 2025, paint a stark picture of an industry under pressure. Trim prices fell sharply to $204 per pound from $302 in the previous quarter, while wet whole plants saw the steepest decline, dropping from $150 to just $71 per pound. Only extraction-allocated products showed modest gains, with bud for extraction climbing to $354 per pound.
A Market in Freefall
The cannabis industry’s financial struggles extend beyond wholesale pricing. Colorado’s total marijuana sales have plummeted from over $2.2 billion in 2021 to just $1.4 billion in 2024—a devastating 36% decline that represents the lowest figure in seven years.
This market contraction has claimed several high-profile casualties. Notable brands either exited Colorado entirely or ceased operations. Major dispensary chains like have also closed multiple locations, while another major operator sold all six of its Colorado dispensaries under its original ownership.
The price decline began its relentless trajectory in 2021, when wholesale flower commanded over $1,700 per pound. Brief hope emerged in 2024 when prices climbed to $750, but the market quickly resumed its downward trend. Today’s $649 rate is a 62% drop from those peak prices.
Beyond Colorado: A National Pattern Emerges?
Colorado’s struggles may reflect larger challenges facing legal cannabis markets nationwide. Recent research from Utah’s medical cannabis program reveals that patients are increasingly turning to illicit sources despite having access to regulated products. A study published in the Journal of Cannabis Research found that 79% of medical patients using illicit cannabis cited high costs as their primary motivation.
This pattern suggests that legal markets across the United States face similar pressures. High regulatory costs, taxation burdens, and complex compliance requirements create pricing structures that struggle to compete with unregulated alternatives. When legal products become prohibitively expensive, consumers—whether medical patients or recreational users—naturally seek more affordable options.
The Utah study identified additional factors driving illicit market use, including access barriers, supply consistency issues, and lingering social stigma. These challenges mirror those faced by Colorado’s legal market, where high operational costs must be passed along to consumers in an increasingly competitive landscape.
The Economics of Oversupply
Colorado’s persistent low prices despite facility closures highlight the complex economics of cannabis cultivation. The remaining operators appear to be maintaining or even increasing production levels, preventing the supply correction that typically follows market consolidation.
Several factors contribute to this phenomenon. Cultivation facilities represent significant capital investments that operators are reluctant to abandon. Many continue operating at reduced margins rather than accepting complete losses on equipment, facilities, and licenses. Additionally, improvements in cultivation efficiency and yields may be offsetting some of the capacity reduction from facility closures.
The state’s tracking system data, used to calculate AMRs from June through August 2025, reflects transactions between cultivation facilities and retail stores or product manufacturers. These wholesale prices form the basis for Colorado’s 15% excise tax, ensuring the state maintains revenue even as the industry struggles.
Implications for Cannabis Policy
Colorado’s experience offers important lessons for other states developing cannabis regulations. The dramatic price decline and industry consolidation suggest that heavy taxation and regulatory burdens can create unsustainable market conditions, potentially driving consumers toward illicit alternatives.
The 15% excise tax, combined with standard sales taxes and regulatory compliance costs, creates a significant price premium for legal products. When wholesale prices are already under pressure, these additional costs can make legal cannabis significantly more expensive than black market alternatives.
Utah’s research reinforces this concern, showing that cost remains the primary driver for illicit market participation even in medical programs designed to serve patients with legitimate therapeutic needs. If regulated markets cannot achieve price competitiveness, they risk failing in their primary objective of eliminating illegal cannabis trade.
Looking Forward
The cannabis industry’s current challenges may represent growing pains as markets mature and find equilibrium. However, Colorado’s experience suggests that simply reducing the number of licensed operators may not be sufficient to restore pricing stability if underlying cost structures remain prohibitive.
Successful cannabis regulation requires balancing public health and safety objectives with market viability. Overly burdensome regulations and taxation can undermine legal markets, potentially preserving the very illicit trade that legalization aimed to eliminate.
The lesson extends beyond cannabis to any newly regulated industry: sustainable markets require regulatory frameworks that enable legal operators to compete effectively with unregulated alternatives. When legal products become significantly more expensive than illegal options, consumers will make predictable choices regardless of the regulatory intent.
