The Journal: How the 'Napa Valley of Cannabis' Dried Up
Released: April 18, 2025
Host: The Wall Street Journal & Gimlet
Presenters: Kate Linebaugh, Ryan Knutson, Jessica Mendoza
1. Introduction: Pueblo's Cannabis Dream
The podcast episode begins in Pueblo County, Colorado, a region once brimming with promise for the burgeoning legal marijuana industry. Hosted by Jessica Mendoza, the narrative centers around Pueblo's ambitious journey to become the "Napa Valley of cannabis," a vision that ultimately faced significant challenges and setbacks.
2. Early Days: A Promising Start
Karen Randall, a Pueblo resident, provides firsthand insight into the area's initial enthusiasm for legalized marijuana. She recalls how Pueblo aimed to transform itself by leveraging the newly legalized cannabis market to revitalize its struggling economy.
Karen Randall [00:22]: “Pueblo was a place full of hardworking blue collar workers who just couldn't catch a break. They had been this huge steel town. They were shedding those jobs for years.”
3. The Boom: Rapid Growth and High Hopes
Following Colorado's legalization of recreational weed in 2014, Pueblo rapidly positioned itself as a central hub for cannabis businesses. The community saw an influx of entrepreneurs and consumers, leading to significant economic optimism.
Julie Wernau and Karen Randall toured Pueblo, noting the proliferation of cannabis greenhouses and dispensaries. The excitement was palpable, with reported sales soaring.
Karen Randall [04:22]: “Leading up to the first day of marijuana sales, people literally like, packed up everything they owned, got in their vehicles, and just drove to Colorado with no plans.”
During this period, establishments like Sticky Icky's dispensary thrived, with daily sales peaking at approximately $20,000, contributing substantial tax revenue to the county.
Daniel Swick [06:48]: “There's a lot of strains that are actually have really humorous names to them. Very funny names.”
4. The Bust: Oversaturation and High Taxes
However, the rapid expansion soon led to oversaturation. By 2021, the number of cannabis businesses in Pueblo surged to over 200, far exceeding the local demand. This saturation, coupled with high taxation, strained the sustainability of these enterprises.
Karen Randall [08:21]: “The number of cannabis businesses that flooded into this city and the surrounding county were pretty outsized for the demand.”
Colorado imposed a complex tax structure on marijuana products, including a 15% sales tax, a 15% excise tax at the state level, an additional 5% excise and 6% sales tax at the county level, and another 10% excise tax for businesses within the city of Pueblo alone.
Karen Randall [09:22]: “Colorado levies a 15% marijuana sales tax and a 15% excise tax on marijuana, and then Pueblo county tax on another 5% excise tax and a 6% sales tax. And then if you have a cannabis business that's in the city of Pueblo, you're going to pay an additional 10% excise tax, which is one of the highest in the state.”
5. The Black Market and Competition
The high tax burdens made legal cannabis products significantly more expensive than their black market counterparts. Consequently, illegal marijuana sales not only persisted but intensified, undermining the legitimate businesses and contributing to law enforcement challenges.
Karen Randall [10:27]: “If you're not paying for, you know, sales tax, excise tax, marijuana sales tax, county tax, city tax, state tax, you can charge way less than the legal competition.”
Moreover, as other states began legalizing marijuana, Pueblo faced increased competition, further diminishing its market share and exacerbating the decline of local businesses like Sticky Icky's.
6. Social Consequences: Crime and Homelessness
The decline of the cannabis industry had broader social ramifications. An influx of individuals moving to Pueblo for cannabis-related opportunities, many with criminal backgrounds, led to a rise in homelessness and crime rates. Law enforcement struggled to manage the burgeoning issues, with a notable increase in unattended encampments.
Ryan Masterson [15:10]: “They came to Pueblo because... they wanted to land in Denver, I wanted to land in Boulder, I wanted to land in Aspen... realized quickly that they couldn't afford it and where could they look to a place to come, and Pueblo would end up being a good landing spot for them.”
7. The Economic Fallout
As businesses shuttered and tax revenues declined, Pueblo faced significant economic strain. The initial promise of job creation and increased tourism gave way to economic instability, leaving the city grappling with diminished financial resources to address emerging social issues.
Karen Randall [11:58]: “The profitability has dropped dramatically for the businesses. So only, like, a quarter of these businesses are even profitable.”
8. Current Status and Future Outlook
Today, Pueblo hosts approximately 45 cannabis businesses, a stark contrast to its peak. While some establishments like Sticky Icky's remain operational, they operate on a much smaller scale with reduced customer bases. The local economic development corporation has shifted focus away from cannabis, emphasizing traditional industries in hopes of stabilizing the economy.
Karen Randall [17:44]: “These are the guys whose job it is to sort of sell Pueblo to businesses and help create a better economic picture. And what they told me essentially is that they're kind of leaving marijuana behind...”
9. Lessons Learned
Karen Randall reflects on Pueblo’s experience, emphasizing that while the venture into legalized cannabis did not unfold as anticipated, it offers valuable lessons for other communities embarking on similar paths. The key takeaway is not to dismiss legalization outright but to approach it with informed strategies to avoid Pueblo's pitfalls.
Karen Randall [18:35]: “I think there's a lot of lessons to be learned from a place like Pueblo that was first when it came to legalizing marijuana...”
Jessica Mendoza [19:01]: “So it isn't that Pueblo is an example of why this is not going to work. It's more of a it's not going to work this way.”
Conclusion
Pueblo County's ambitious embrace of the legal cannabis industry serves as a cautionary tale about the complexities of rapid economic transformation. Oversaturation, high taxation, competition, and unintended social consequences highlight the importance of strategic planning and realistic expectations. As more states consider legalization, Pueblo's experience underscores the necessity of learning from past endeavors to foster sustainable and beneficial outcomes.
Notable Contributors:
- Jessica Mendoza: Host and reporter
- Karen Randall: Local Pueblo resident and cannabis business owner
- Julie Wernau: WSJ colleague and reporter
- Daniel Swick: Manager at Sticky Icky's dispensary
- Ryan Masterson: Local police department officer
Production Team: Katherine Brewer, Pia Ghidkari, Carlos Garcia, Rachel Humphries, Sophie Codner, Ryan Knudson, Matt Kwong, Kate Linebaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Allen Rodriguez Espinoza, Heather Rogers, Pierce Singhi, Jeevika Verma, Lisa Wang, Katherine Whalen, Tatiana Zemis, Trina Menino.
Music: so Wylie, Blue Dot Sessions
For more episodes and exclusive content, visit The Journal's Spotify Page and the Wall Street Journal.