Spotlight on Colorado's Cannabis Market
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Spotlight on Colorado’s Cannabis Market

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History of US Cannabis Prohibition Part 1 of 5
The World's largest cannabis markets Part 2 of 5
A guide to cannabis in the US Part 3 of 5
Spotlight on Colorado's Cannabis Market 4 of 5
Legal vs. Illegal: an overview of the cannabis market Part 5 of 5

The following content is sponsored by Tenacious Labs.

Colorado Cannabis Spotlight

Spotlight on Colorado’s Cannabis Market

In 2014, Colorado made history by being the first state to have the sale of legal recreational cannabis take place. Once considered unchartered territory, the state has since established itself as a mature and prospering legal market.

And as various governments explore the possibilities around cannabis legalization, policymakers likely consider Colorado’s journey as one to potentially emulate in order to reach some of the same longer-term outcomes that have materialized.

The following sponsored graphic from Tenacious Labs provides a spotlight analysis of the Colorado cannabis market, and looks at defining trends and key developments that have occurred during the last eight years.

Zooming in on Sales and Tax Revenue

From a fiscal perspective, cannabis legalization has been a hit for the state of Colorado. Since it started in 2014, Colorado has generated over $2 billion in tax and fee revenue from the legal cannabis space.

Here’s a look at the growing tax revenues, which started from a modest $46 million and have surged nearly 10x.

YearTax Revenue Generated ($M)
2014$46.1
2015$104.7
2016$164.1
2017$220.6
2018$243.4
2019$279.1
2020$362.0
2021$396.1

Moreover, cannabis sales are still increasing. The year 2021 was a record year which generated $2.2 billion in revenue.

Given the rise in debts most governments have incurred in response to the COVID-19 pandemic, new sources of revenue and taxation, and rising ones at that, are attractive and may act as a key driver for legalization initiatives in other regions.

Cannabis Employment is Lighting Up

There are multiple converging factors that suggest cannabis legalization may result in a long list of benefits. Like sales and taxes, the employment sector has seen robust growth and shows more and more signs of picking up speed.

In Colorado, the industry boasts over 40,000 jobs that contribute to the local economy, including ones like “budtender”, which were almost nonexistent a number of years ago.

Likewise, the number of cannabis jobs across the country has grown from 122,000 in 2017 to 428,000 in 2022. In fact, in the U.S. there are now more jobs in cannabis than there are bank tellers, insurance agents, and hairstylists.

But the growth isn’t expected to stop quite yet. By 2025, some estimates say there will be 1.5 million jobs in cannabis, as legalization momentum continues to surge. In other words, the cannabis industry can represent 1% of the roughly 150 million people employed in America.

New Product Innovation

Fueling the growing figures around the cannabis industry is the high level of innovation in this space. Given the versatility of the cannabis plant, the modern industry now offers greater diversity and variety in products. And this can come in the form of consumption methods ranging from inhalation like vaping and smoking, to edible beverages and baked goods.

Here’s how market share for these products fared in 2020:

ProductMarket Share (%)Market Value ($B)
Flower43.4%$10.9B
Cartridges20.3%$5.1B
Edibles9.2%$2.3B
Concentrates8.8%$2.2B
Pre-rolls8.8%$2.2B
Topicals0.8%$0.2B
Accessories8.8%$2.2B

However, innovation in products is not stopping.

In 2020, an additional 7,000 new products hit dispensary shelves compared to the year prior. With new products emerging every day, it’s highly possible the future of cannabis can expand its total addressable market by attracting new consumers who may not resonate with the offerings of today.

Project Funding and Community Impact

Where do the millions in annual cannabis tax revenue go? Since legalization, Colorado has produced a track record of positive and impactful initiatives they’ve funded through cannabis dollars.

In addition, the state breaks down these revenues and shows how funds are allocated.

Distribution of Annual Tax RevenuesPercentage of Revenues
Marijuana Tax Cash Fund42%
Public School Capital Construction Assistance Fund24%
Public School Fund17%
Local Government Distribution9%
General Fund8%

By far the largest portion of these funds go to the Marijuana Tax Cash Fund. Which supports an assortment of construction projects and law enforcement programs throughout the state.

Next, is the Public School Capital Construction Assistance Fund, which receives almost a quarter of the total tax dollars. This fund helps provide much needed capital to schools when upgrading their facilities.

Altogether, taxation from cannabis is making positive impacts across numerous avenues. For instance, in recent years, $3 million went towards opioid intervention, $16 million for affordable housing, and $20 million for early literacy programs. As cannabis sales grow, funds from taxes should follow suit, which only fuel greater and more frequent community programs and state initiatives.

Paving the Way Forward

In just under a decade, Colorado has demonstrated the ability to implement cannabis regulations that benefit stakeholders and society more broadly.

As tax revenues, employment, innovation in products, and communities all continue to flourish, many states and countries alike might seek to emulate these results and will look at the Colorado story for guidance.

In the next part of The Legal Landscape Series, we’ll dive into a legal vs illegal overview of cannabis markets.

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How Ending Tropical Deforestation Can Keep Global Warming Below 1.5°C

Tropical deforestation is a culprit of carbon emissions—which makes protecting forests crucial to keep to the Paris Agreement 1.5°C pathway.

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How Ending Tropical Deforestation Can Keep Global Warming Below 1.5°C

In the case of global warming, a few degrees make all the difference.

The United Nations’ latest IPCC report emphasizes that the Earth is on a collision course with catastrophic climate change—that is unless, in line with the 2015 Paris Agreement, the global rise in temperatures can be limited to 1.5°C.

To achieve this however, the world will need to significantly reduce its carbon emissions. Today’s graphic from The LEAF Coalition highlights how protecting forests is essential to this process.

Tropical Deforestation: A Carbon Emissions Culprit

According to the World Economic Forum, to keep to a 1.5°C pathway by 2030, we’ll need to cut greenhouse gas emissions in half. For this trajectory to be maintained in 2050, emissions need to be completely eliminated.

However, tropical deforestation accounts for 10% of global carbon (CO₂) emissions today, which is comparable to the emissions outputs of entire countries.

 Est. Annual CO₂e Emissions
🇨🇳 China12.4 Gt/year
🇺🇸 U.S.6.0 Gt/year
🌳 Tropical tree cover loss5.3 Gt/year

In fact, combined emissions from tropical tree cover loss, including activities of deforestation, rival annual emissions from major emitters, coming in third just after China and the United States.

Protecting Forests is Key

The urgency of ending tropical deforestation to curb emissions cannot be understated. If in the previously mentioned 2030 scenario, it is assumed that emissions have already dropped steeply, deforestation today would still need to be cut by 75% in order to maintain the possibility of keeping to the 1.5°C pathway.

However, there’s a significant barrier—the FAO estimates that we are losing 10 million hectares of forests every year. To put that into perspective, that’s a loss equal to the size of New York’s Central Park every 18 minutes.

For these crucial reasons, urgent collective action is needed to protect forests. Find out how The LEAF Coalition, a public-private initiative is bringing together businesses to do more to fight climate change and halt tropical deforestation.

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ESG Data: The Four Motivations Driving Usage

ESG controversies can damage a company’s value, but ESG data may be able to help manage this risk. What are other reasons for using ESG data?

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ESG Data: The Four Motivations Driving Usage

Data is key to the environmental, social, and governance (ESG) revolution. Access to granular ESG data can help boost transparency for market participants. Unfortunately, 63% of U.S. and European asset managers say a lack of quantitative data inhibits their ESG implementation.

Being clear on the potential application of this data is equally important.

  • Investors and banks can use ESG data for risk assessment, to spot opportunities, and to push companies for change.
  • Companies can publish their own ESG data, quantify progress on their ESG goals, and use data to inform decisions.
  • Policymakers can use ESG data to inform regulatory frameworks and measure policy effectiveness.

This graphic from ICE, the second in a three part series on the ESG toolkit, explores four primary motivations of ESG data users.

1. Right Thing

The objective: Having a positive social or environmental impact.

For investors, this can involve screening out companies that conflict with their values and selecting companies that align with their ESG objectives.

As another example, it can involve comparing the social impact of municipal bonds. One way investors can measure social impact is through scores that quantify the potential socioeconomic need of an area, using metrics like poverty and education levels. Here are the social impact scores for three actual municipal bonds issued in Florida.

StateBond IssuerSocial Impact Score
(Higher = larger potential impact)
FloridaIssuer #176.5
FloridaIssuer #266.6
FloridaIssuer #343.2

Issuer #1’s bond is projected to have a community impact that is nearly twice as high/positive as Issuer #3’s bond.

For companies, doing the right thing can include assessing their progress on ESG goals and benchmarking themselves to peers. For example, gender and racial representation is a growing area of focus.

2. Risk

The objective: Managing ESG risks, such as climate and reputational risks.

For investors, this can involve back-testing or analysis around specific risk events before they materialize. Here are the risk profiles of two actual municipal bonds in California. The shown bonds are practically identical in many ways, except their wildlife score.

 Issuer #1Issuer #2
Current Coupon Rate5.0%5.0%
Maturity DateAug 01, 2048August 01, 2048
S&P RatingAAAA
Price to Date (Call Date)Aug 01, 2027Aug 01, 2027
Price122.0122.0
Yield1.0%1.0%
Wildfire Score (Higher = more risk)3.62.7

Managing ESG risk can also involve analyzing a company’s policies and governance for weaknesses. This is important as an ESG controversy can have long-lasting effects on the valuation of a company.

In one study, companies with ESG controversies dropped more than 10% in value relative to the S&P 500. They hadn’t fully recovered a year after the incident.

3. Revenue

The objective: Targeting outperformance through ESG analysis.

Selecting companies with strong ESG data can align with long-term growth trends and may help boost performance. For heavy emitting industries, research indicates that European companies with lower emissions trade at much higher valuations. The chart below shows companies’ price-to-book ratio relative to the Stoxx 600* sector median.

 UtilitiesEnergyMaterials
Above Median Emission Intensity (Bad)1.91.12.0
Below Median Emissions Intensity (Good)2.71.92.1

*The Stoxx 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

Energy companies with low emissions trade at a valuation nearly two times higher than energy companies with high emissions.

4. Regulation

The objective: Understanding and complying with relevant ESG regulation.

The International Sustainability Standards Board has announced a global reporting proposal aligned with the Task Force on Climate-related Financial Disclosures (TCFD). In addition, a growing number of jurisdictions will require organizational reporting that aligns with the TCFD.

  • Brazil
  • European Union
  • Hong Kong
  • Japan
  • New Zealand
  • Singapore
  • Switzerland
  • UK

Not only that, a European Union regulation known as Sustainable Finance Disclosure Regulation (SFDR) came into effect in 2021. It seeks greater transparency in disclosures from firms marketing investment products. Even firms located outside the EU could be impacted if they serve EU customers. In total, the market cap of these non-EU companies exposed to SFDR amounts to $3.2 trillion.

Matching ESG Data with Motivation

There will be growing demand for transparent data as ESG investing flourishes. To remain competitive, investors, policymakers, and companies need access to ESG data that meets their unique objectives.

In Part 3 of the ESG Toolkit series sponsored by ICE, we’ll look at key sustainability index types.

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