Marijuana tax decline limits city spending

In a quarterly Sales and Use Tax Comparison update, the City of Gunnison reported a nearly 38% decline in sales tax on cannabis since 2021.

Despite the decline, City Planner Amanda Wilson said tax-funded initiatives that benefit from the Special Marijuana Sales Tax, such as law enforcement education, substance abuse prevention and nonprofit grants, are budgeted for on a yearly basis, taking into account projected revenue.

“With marijuana, we have certain restrictions with what we can spend those dollars on,” Wilson said. “They’re truly around mitigation efforts and that [amount] is directly revenue based — so our budgeting there is conservative. We go in with the assumptions and forecasts that our revenues are going to stay flat or continue to decrease. That way our expenditures will always be lower than the revenue — so long as something dramatic doesn’t occur.”

In 2021, the City of Gunnison reported $338,327 in sales tax from marijuana revenue. That amount has decreased significantly in recent years, falling 17% in 2022, 8% in 2023 and nearly 18% in 2024. As of April 2025, the Marijuana Special Sales Tax has declined 14% in the first quarter compared to 2024.

The steady decline in Marijuana revenue is believed to be caused by adjacent states legalizing cannabis, and neighboring Colorado jurisdictions opening recreational dispensaries for the first time, Wilson said. Additionally, the city has identified a decline in cannabis-related tourism, and the Middle Bridge closure as smaller factors that impact revenue.

But even within the City of Gunnison, competition is growing more intense in the cannabis industry.

“Everybody is in competition with everybody to get the best price and the best deals, and it’s hurting the industry,” said San Juan Strains Manager Angela Sowers. “Everyone is lowering their prices, which is no profit for anybody — it's a cutthroat industry.”

In Gunnison, the Special Marijuana Sales Tax supports initiatives surrounding substance abuse and law enforcement. In 2024, a budget of $254,500 supported nonprofits such as Crested Butte State of Mind, Gunnison Valley Mentors and the Gunnison County Substance Abuse Prevention Project. Additionally, the tax paid for two police officer positions and recreation scholarship funds. What the city budgeted that year for cannabis tax receipts was $100,000 less than 2023.

Despite the ongoing decline, Wilson said the 2025 budget should not be impacted because of the conservative approach to projecting revenue. She is optimistic that numbers will improve.

“The amount of money available for us to fund external programs was substantially reduced in 2025,” Wilson said. “We anticipate that we’ll start to see that drop level off, and not be as dramatic going into 2026.”

(Alex McCrindle can be contacted at 970.641.1414 or alex@gunnisontimes.com.)