Colorado Marijuana Taxes Produce Windfall

By Jeralyn, Section Colorado News
Posted on Thu Feb 20, 2014 at 12:13:19 PM EST
Tags: marijuana reform (all tags)

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Colorado Governor John Hickenlooper released a proposal this week on how he intends to spend the taxes collected from marijuana sales.

Marijuana sales have greatly exceeded expectations. For the fiscal year beginning in July, marijuana sales are expected to reach $1 billion, with $600,000 coming from the sale of recreational pot.

In the proposal, Hickenlooper's budget office says it expects the recreational and medical marijuana industries will pump nearly $134 million in tax and fee revenue into state coffers in the fiscal year beginning in July. Extrapolating from those figures, the proposal estimates sales in all marijuana stores to approach $1 billion for that fiscal year. Recreational pot shop sales are estimated to account for more than $600 million of that — a more than 50 percent increase over a previous projection.

The first $40 million go to school construction, as required by law. Above that, But Hickenlooper's office expects to have "$28 million this fiscal year and $101 million next fiscal year left over to spend on other things."[More...]

As to the rest:

Youth marijuana use prevention ($45.5 million);
Substance abuse treatment ($40.4 million);
Public health ($12.4 million);
Regulatory oversight ($1.8 million);
Law enforcement and public safety ($3.2 million); and
Statewide coordination ($0.2 million).

Law Enforcement will get a boost:

The Department of Public Safety requests $473,228 cash funds from the Marijuana Cash Fund and 7.0 FTE for public safety intelligence support to collect and analyze information on illegal production, sale and distribution of marijuana in Colorado. The Department will develop a comprehensive intelligence framework for effectively identifying future threats to public safety related to illegal drug activity and linked criminal behavior

The Governor also proposes spending $1.87 million on a new campaign, "Drive High, Get a DUI."

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Colorado Marijuana Taxes Produce Windfall | 14 comments (14 topical)

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Hopefully... (5.00 / 2) (#1)
by kdog on Thu Feb 20, 2014 at 12:28:00 PM EST

48 other statehouses are taking notes...other states may not care much for individual liberty (or reason, for that matter)...but we know they likes funds to spend.

: When money is involved (none / 0) (#3)
by AmericanPsycho on Thu Feb 20, 2014 at 06:17:12 PM EST

You can bet they're just not taking notes but writing encyclopedic volumes of research on their next move.

Glad to see that some of that money (none / 0) (#2)
by MO Blue on Thu Feb 20, 2014 at 01:42:25 PM EST

is going for substance abuse treatment. Wish CO was allocating some of it specifically for mental health treatment.

So what happens when state goes to store... (none / 0) (#4)
by unitron on Thu Feb 20, 2014 at 09:25:19 PM EST

...,says "You owe us $X in taxes", and store says "Go get it from the guys who robbed us of our cash that we couldn't put in a bank"?

Really ? (none / 0) (#5)
by ScottW714 on Fri Feb 21, 2014 at 09:26:21 AM EST

I suspect the same thing that happens when any other business doesn't pay their taxes. Several months of notices, a court date, then asset seizure.

Insurance is what people/businesses purchase to ensure against large losses. Has someone been robbed and not been able to meet their tax obligations, or is this just a product of your imagination ?

Weren't you the one who argued the revenues they predicted were wildly inflated ?


I never said anything about... (none / 0) (#6)
by unitron on Fri Feb 21, 2014 at 06:51:05 PM EST

...revenue expectations one way or the other.

In fact, I haven't said much of anything about the Colorado MJ law changes.

But it's been brought up on this site already that the disjoint between state and federal law has created a situation where marijuana stores can't get bank accounts and wind up holding a lot more cash than you'd want bad guys to know you were holding.


I Understand That... (none / 0) (#8)
by ScottW714 on Mon Feb 24, 2014 at 09:21:45 AM EST

...but what does that have to do with taxes ?

I apologize, someone had predicted that the dollars the state will take in were highly inflated predictions, turns out, so far, they were very conservative predictions.

And they still use banks, just not accounts with the business name on it. Right now, I believe, they have to use their own personal accounts, which for most business is really stupid, but for businesses in which the IRS doesn't allow business deductions, not that big of a deal.


: Another problem (none / 0) (#13)
by sj on Mon Feb 24, 2014 at 05:43:04 PM EST

is the amount of cash to be deposited. That's a problem that exists whether it's a personal account or a business one.

Serious money (none / 0) (#7)
by Mikado Cat on Fri Feb 21, 2014 at 11:50:12 PM EST

I'm sure many politicians see that as a huge pig on a spit, pork ready to be shared around. Some good is bound to come of it.

CO has 5.2 million residents, crikey, that is $200 per person per year on average?

CA has 38 million people, big big bucks right under the pols noses.

Last ones to the trough will end up sharing a bunch of the tax revenue with the feds too.

Isn't California... (none / 0) (#9)
by ScottW714 on Mon Feb 24, 2014 at 09:25:44 AM EST

...making a lot of dollars of the medical version ?

It's a crying shame that my state is basically losing tons of revenue. I equate this this something like not participating in PowerBall Lottery. Very dumb considering people are going to smoke/gamble regardless, might as make a couple bucks off of their vices.


Hickenlooper is cautioning (none / 0) (#10)
by jbindc on Mon Feb 24, 2014 at 09:49:27 AM EST

other states about going forward with legalizing pot at this time.

Yes, it's about it keeping all of that tax money in his state and not having to share it with say, Nevada, but he makes some good points too.

"The jury is still out on this thing," he said in between meetings at the National Governors Association in Washington . "It's going to be one of the great social experiments of the 21st century. As we implement it, we want to make sure that our society is no worse off than it was before this was passed. If we were legalizing whiskey, I'd be doing the same thing."
Hickenlooper opposed a 2012 ballot measure that legalized marijuana, but he's worked with the Legislature to regulate the drug after it passed.
The state of Colorado estimated this week that stores will sell $1 billion of the product in the next fiscal year, generating $134 million in tax and fee revenue.
He said "several" other governors asked about the revenue projections on marijuana taxes, and he said they should watch to see whether legalization reduces his prison population.
"We're trying to look at this and say the tax revenues we're raising are not to reduce other taxes or reduce government spending," he said. "I don't think anyone should be looking at it as a source of revenue."
Hickenlooper proposes using the windfall on programs aimed at treatment and prevention.
"It's like promoting gambling," he said. "It always makes you nervous when you see government promoting gambling or any of those sin trades. They are revenue sources. ... We know people are not going to be better off smoking pot. It doesn't mean they should be arrested ... but we know it doesn't make you smarter."

Seriously... (5.00 / 2) (#11)
by ScottW714 on Mon Feb 24, 2014 at 10:26:33 AM EST

...who isn't looking at the revenue generated.

What other purpose would there to be legalizing it, from a legislative view ? Without the revenue this probably would have never been on the ballot, and certainly would not have passed, it's the main selling point, IMO..

Social experimentation ? Please, how many of these people started smoking because the law changed ? If it's a social experiment, it's certainly didn't start in Colorado in this decade.

The experiment is done, human beings really like marijuana and will do jail time in order to have it. The only experiment being done in Colorado is making some bucks off off a human vice rather than throwing those same folks in costly cells. IOW, the 'grand experiment' is basically seeing if common sense will prevail in the law in regards to something a lot of people really like.

And once again, I think the dollars will make it almost impossible to go back, once those dollars are put into budgets, it is nearly impossible to turn back time and make due without them. So while the governor might want others to not think about the money, this entire issue is all about the money, again IMO.


Yep (none / 0) (#12)
by jbindc on Mon Feb 24, 2014 at 10:49:30 AM EST

Until and if that extra money has to be put into things like more abuse and addiction treatment, more costs to contend with other problems

I mean, Alaska legalized pot in the 1970's, only tried to recriminalize it in the 1990's because teen use jumped to twice the national average, so it's not like this experiment hasn't been tried before. Colorado and Washington aren't breaking barriers here.


: Where did this stat ... (none / 0) (#14)
by Yman on Mon Feb 24, 2014 at 08:44:35 PM EST

I mean, Alaska legalized pot in the 1970's, only tried to recriminalize it in the 1990's because teen use jumped to twice the national average, so it's not like this experiment hasn't been tried before.
... come from? Was this the DEA pamphlet "Speaking Out Against Drug Legalization"?
The pamphlet cites a 1988 University of Alaska study, but not very well.

In the course of this study, we relied on peer-reviewed professional literature. Often, proponents or opponents of prohibition cite casual or spurious statistical associations to advance their case. There are difficult statistical issues in such studies, and often an apparent association can be superficial. A study that is well done but not comparable to others might be cited out of context. A case in point is a study produced in 1988 which is often cited as evidence of dramatic increases in marijuana use by youths after Alaska decriminalization in 1975. That study is reviewed here.
See pages 19-20 for the long list of reasons why the 1988 study doesn't support the DEA's claim, not to mention the fact that the author of the 1988 study (Segal) himself says there are too many variables to use the study to argue for or against decriminalization.