The Rise & Fall of Pueblo’s Cannabis Industry
The story of the Pueblo Cannabis Industry in Colorado reveals both the hope and challenges of legalising recreational marijuana. What started as a bold plan to revive a struggling city provides valuable lessons for any community considering the same path. We explore Pueblo’s highs and lows, the reasons for its decline, and what other regions must consider before following suit. Reflections here are based on the excellent reporting in the podcast “How the Napa Valley of Cannabis’ Dried Up” by Spotify.
Pueblo’s Big Bet on Cannabis: Pueblo County, two hours south of Denver, was once defined by steel and hard work. But after its steel mills and slaughterhouses closed, Pueblo was left searching for a new economic engine. With the legalisation of recreational marijuana in Colorado in 2014, local leaders saw an opening. They marketed Pueblo as the “Napa Valley of Cannabis,” hoping that marijuana tourism, jobs, and new tax revenue would drive a revival.
The start was electric. Entrepreneurs from around the US moved in, lining up for business licences and opening dispensaries. Headlines buzzed with excitement as residents and visitors waited in long queues outside new marijuana shops.
Within a month, just two legal shops in Pueblo County generated $1 million in sales and over $56,000 in tax for the county. Dispensaries like Sticky Ickies quickly became community favourites, pulling in up to $20,000 a day in sales. The sense of possibility was everywhere.
Early Wins for the Pueblo Cannabis Industry: The immediate impact of legalising recreational marijuana was hard to ignore. The city saw:
- A wave of new businesses and jobs
- Tourists coming from other states to buy legal cannabis
- Food trucks and local entrepreneurs thriving
- Increased local tax revenue
- National headlines crediting Pueblo for its forward-thinking approach
The optimism was real. Yet, at the same time, the seeds of tougher times were already being sown.
Oversaturation and High Taxes Weaken the Industry: Before long, the Pueblo Cannabis Industry faced new pressures. The city had more than 200 cannabis businesses at its peak but only 7–10 Starbucks in town. That’s a lot of dispensaries for one city. Market saturation set in, making it impossible for most shops to survive. Profits plunged as competition skyrocketed.
Another big problem was the tax rate. State and local taxes on legal marijuana reached as high as 41% in Pueblo. The city imposed extra excise and sales taxes, making prices on legal cannabis much higher than on the black market. Customers naturally looked for cheaper alternatives. For many, that meant the illegal sellers who never disappeared.
Black Market Does Not Disappear After Legalisation: One of the strongest arguments for the legalisation of recreational marijuana was the hope that it would kill illegal sales. For Pueblo, the opposite happened. Legal dispensaries may have flourished at first, but the high taxes meant many buyers kept turning to the black market. Unregulated sellers could offer lower prices and now easily blend in with the flood of new cannabis businesses.
Police in Pueblo noted that, rather than shrinking, the illegal trade in marijuana actually grew after legalisation. The presence of legal cannabis also made enforcement against black market sellers harder, not easier.
Other States Catch Up – and Competition Rises: The final blow for many business owners in Pueblo was outside competition. At first, out-of-state buyers flocked to Colorado, but as more states legalised marijuana, fewer visitors needed to make the trip. Businesses like Sticky Ickies saw daily sales drop from $20,000 to $2,500. Shops closed or had to lay off staff. Some owners moved their businesses to states like New Mexico, where lower taxes offered a chance to start over.
Social Impacts and Community Challenges: The effects of the failing Pueblo Cannabis Industry rippled across the community:
- Many new residents, drawn by the early boom, remained long after job prospects faded.
- Police and shelters reported a sharp rise in homelessness, with the unhoused population growing from around 15 before legalisation to over 500.
- Crime rates went up, placing more strain on law enforcement and social services.
- Tax revenue from cannabis, meant to support city programmes, fell short of what was needed to tackle these growing problems.
City officials, organisations, and volunteers could not keep up with the demand for social support. Burnout soared among those committing time and energy to help struggling families. The dream of a thriving cannabis-powered economy faded quickly.
Turning Away from Marijuana for Economic Growth: Slowly, Pueblo’s city leaders and economic officials shifted focus. The early excitement for building a regional cannabis powerhouse gave way to renewed support for traditional industries. The city stopped putting recreational marijuana at the centre of its plans.
The Pueblo Cannabis Industry remained, but as a shadow of its early self. Attitudes shifted from optimism to realism, then to caution.
Lessons from the Pueblo Cannabis Industry: Pueblo’s experience holds key lessons for any city or state considering the legalisation of recreational marijuana. Among the most important:
- Don’t Overpromise: Legal cannabis is not a cure-all for economic woes.
- Watch for Oversaturation: Too many businesses chasing too few customers benefits no one.
- Consider Taxes Carefully: Excessive taxes push buyers back to the black market.
- Stay Realistic About Social Impacts: Homelessness, crime, and strains on support systems can rise, and tax revenue is rarely enough to fix these issues quickly.
- Look Beyond the Headlines: National attention may be positive at first, but real, lasting change takes time and nuanced policy.
Implications for Other Communities: The experience of Pueblo proves that the legalisation of recreational marijuana requires careful planning, clear regulations, and ongoing community support. Legalisation alone cannot deliver a strong economy or solve social problems. Prevention, education, and support for vulnerable populations are essential parts of public policy.
For communities looking to the cannabis industry for economic salvation, Pueblo’s story is a cautionary tale. Smart regulation and prevention strategies, not high hopes and low taxes, are more likely to lead to lasting benefits.
(Also see Cannabis Market Collapse Hits California & Colorado
Source: Many details in this post are based on insights from “How the Napa Valley of Cannabis’ Dried Up,” a Spotify podcast.