This New Year's Day seemed more anticipated in Colorado than even the turning of the Millennium, because as of 1 January recreational marijuana became fully legalized in the state.
Myriad articles have been written about the rules, regulations and expectations as a result of the groundbreaking law, but little has been evaluated about the impact, if any, of the new law on the state's tourism industry.
Those 21 years of age and over can buy up to an ounce of recreational marijuana from a licensed dispensary. Smoking is limited to private property, which means if a hotel is designated as non-smoking, that prohibition will apply for recreational pot as well. Also, individual counties within the state can choose to allow or disallow dispensaries in their jurisdiction.
As of 1 January, there were about 40 recreational dispensaries approved by the state, most of them in the Denver area. There are many medicinal marijuana stores that have been around for some time. Those stores will continue to operate under their current business model. Medicinal users, unlike recreational users, aren’t required to pay hefty taxes.
Medicinal pot tourism has been in Colorado for a couple years, but now tour operators can reach a much greater base of clientele. Companies such as Colorado Rocky Mountain High Tours offer cannabis tours in limousines, while others specialize in mixing pot tours with ski trips (though hopefully not overlapping the two).
Pot and hotel demand
The question for the Colorado hotel industry remains: Does legalizing pot translate into higher hotel demand? Out-of-state consumers can purchase pot legally in Colorado but cannot transport it back, so naturally it would make sense that there should be an increase in hotel demand if the demand for pot comes from those who are farther than, say, a few hours' drive of a dispensary. From media reports regarding the long lines on 1 January at the recreational dispensaries, many of the customers were from out of state.
Though it's only a couple of weeks into the new year, we can analyze the daily performance for Denver and Colorado to look for any demand spikes. We can also compare the data to the figures for the first week of December, just in case this year's heavier mountain snowfalls could explain any increase in demand.
Daily hotel performance data was available through 10 January as of press time, and for these first 10 days of 2014 total demand was up 8.4% in Colorado, and total revenue was up 18.5%. This compares to 9.4% and 13.7% for demand and revenue, respectively, for the first 10 days of December, so it's difficult to see an impact in only 10 days for the state. For Denver, demand for the first 10 days of 2014 was up 12.1% over 2013, though similar results were seen for the first 10 days of December.
It is noted, however, that demand on New Year's Eve this year in Denver was up 108.5% over 2013 levels. And there wasn't a Broncos game anytime around that date. So perhaps all the out-of-towners arrived a day early to file into the hours-long lines bright and early New Year's Day.
It's clear that the state stands to benefit fiscally from the heavy taxation associated with recreational marijuana, but it will likely be some time before we will see whether any true demand benefits will occur for the lodging industry.
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