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Thursday, February 20, 2014

Marijuana Tax Revenue in Colorado Even Higher Than Expected

Posted by on Thu, Feb 20, 2014 at 10:36 AM

Figuring out what to do with an extra $28 million in tax income is a good problem for a state to have.

Dom already mentioned this in the Morning News, but here's a little more from the Denver Post:

DENVER—Colorado's legal marijuana market is far exceeding tax expectations, according to a budget proposal released Wednesday by Gov. John Hickenlooper that gives the first official estimate of how much the state expects to make from pot taxes...

The governor predicted sales and excise taxes next fiscal year would produce some $98 million, well above a $70 million annual estimate given to voters when they approved the pot taxes last year. The governor also includes taxes from medical pot, which are subject only to the statewide 2.9 percent sales tax.

It's like Christmas come early—I hope other states are feeling jealous.

Governor John Hickenlooper said his priorities for spending the marijuana revenue include youth drug-use prevention, substance-abuse treatment, and public health, plus some presumably one-time costs like a "Drive High, Get a DUI" media campaign. Hopefully, once a few years have passed and people see that the sky hasn't fallen, that kind of marijuana-mitigation spending can be rerouted to more basic state needs.

Legislators in Olympia just announced their projections of $190 million in pot-related tax revenue over a four-year period, or an average of $47.5 million per year.

The forecast by the Economic and Revenue Forecast Council showed that $51 million in revenue is expected for the 2015-2017 biennium from marijuana production and sales. An additional $138.5 million is expected for the next two-year budget that ends mid-2019. A little under half of that revenue is expected from excise tax and license fees related to the marijuana market, and the rest is expected to come from retail sales tax and business taxes...

Steve Lerch, the council’s executive director, said that because of concerns over local moratoriums and bans on pot sales and general uncertainty about how the system will work, the council has made assumptions that sales won’t start until June of next year.

Uncertainty, of course, is the name of the game until we actually start selling—two years ago, when there was much more uncertainty about how this would all work, state officials were projecting over $500 million in tax revenue within the first year of legalization and regulation.

You can see a breakdown of how Washington State will spend its pot tax revenue at the ACLU's website (the link is a pdf). Our state's plan includes allocations for health care, drug prevention, and drug education, but also routing money to the general fund to use for whatever's needed.

If our current estimates are wrong, please let them be wrong Colorado-style.

 

Comments (18) RSS

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treacle 1
This is why pot is being legalized in the first place. Did other people not realize that?
Posted by treacle on February 20, 2014 at 10:41 AM · Report this
Will in Seattle 2
BC and the rest of Canada are looking at what CO and WA do with revenues, and so is Nevada
Posted by Will in Seattle http://www.facebook.com/WillSeattle on February 20, 2014 at 10:58 AM · Report this
Matt from Denver 3
Hickenlooper has always been very reluctant to embrace legal pot. Whether it's some ingrained "drug R bad 'mkay" thing, a genuine disdain for marijuana, or a former microbrewer's instinctive reaction to competing recreational drugs, I can't say, but it's just his style to use drug tax money to promote antidrug material (now labeled "marijuana-mitigation spending).

Hick is a shoe-in for reelection this fall, but I hope he finds a job with the Clinton administration in 2016. Hick's overall a good guy, but between that and his former petroleum engineer's bias for fracking, I really would rather see someone else occupy our governor's mansion.
Posted by Matt from Denver on February 20, 2014 at 11:01 AM · Report this
4
I wonder how much states will save in spending on their law enforcement, criminal justice, and correctional institutions, with pot legalized?
Posted by Brooklyn Reader on February 20, 2014 at 11:07 AM · Report this
Urgutha Forka 5
I disagree that revenue from pot sales should go towards basic state needs. They should go towards unnecessary state projects (things like building entertainment stadiums and whatnot).

Using pot sales to fund necessary projects creates a weird "forced" incentive for people to support greater pot sales when it might be against their interests.

For example, using pot sales to fund education... so now teachers will be encouraging people to buy more pot? That seems like a recipe for disaster.
Posted by Urgutha Forka on February 20, 2014 at 11:09 AM · Report this
6
Wait, they're saying JUNE 2015 now!?! I thought stores were supposed to open up this year? Or is this just that the revenue won't be available for the budget until it has been on sale for a year?
Posted by fad on February 20, 2014 at 11:14 AM · Report this
Theodore Gorath 7
@5: Lottery money goes to fund schools, it is not as if teachers are always begging kids to go buy lotto tickets, or people who do not play the lottery are convinced to go buy tickets for the good of the tax revenues.

State money should be used for what it is needed most, regardless of how it is gained. I recognize that sometimes these concessions must be made to get laws passed (like requiring a certain percentage of gambling taxes to go to schools), but really they are harmful, immature, and unnecessary.
Posted by Theodore Gorath on February 20, 2014 at 11:18 AM · Report this
keshmeshi 8
@5,

It should just go to the general fund like most other taxes.
Posted by keshmeshi on February 20, 2014 at 11:48 AM · Report this
treacle 9
@4 "Save"? You mean, redirect.
Posted by treacle on February 20, 2014 at 11:53 AM · Report this
10
I wish we could move shit along already. At the current rate it doesn't even feel like anything will be open for business by the time the second anniversary of the legislation rolls around.
Posted by The CHZA on February 20, 2014 at 12:12 PM · Report this
GhostDog 11
@10. Yeah. I really wanted to go to Seattle for my April vacation. Oh well, I'm told that Denver is nice that time of year.
Posted by GhostDog on February 20, 2014 at 12:34 PM · Report this
Some Old Nobodaddy Logged In 12
And in Washington, the group of very serious incompetents & very serious idiots over at the WSLCB are busy making paper dolls and holding milk-thru-the-nose competitions.
Posted by Some Old Nobodaddy Logged In on February 20, 2014 at 12:35 PM · Report this
brandon 13
Some money to social services and mental health would be nice. They have been getting cut left and right. Our mental health provider in Olympia, BHR, is in very dire straights (for various reasons, part of which are it's own fault but funding cuts haven't helped and keep in mind this is happening in front of the back drop of getting those crazy homeless people out of downtown)
Posted by brandon on February 20, 2014 at 12:40 PM · Report this
AFinch 14
Heh...I was out in Denver two weeks ago (and really up in Frisco to ski) and made my contribution to the state coffers. It was a surreal experience making a legal purchase. So happy for Colorado. The kid behind the counter took himself waaay to seriously but I chalk that up to the excitement of being legit.
Posted by AFinch on February 20, 2014 at 12:47 PM · Report this
15
I can only hope/pray that the folks at WSLCB are paying close attention to what's happening in CO. They've been moving slower than glaciers at getting permits issued and thus we're losing tax revenues (or, more aptly, not getting possible revenues). But, more importantly, they need to seriously re-think their demand estimates.
Posted by gnossos on February 20, 2014 at 1:01 PM · Report this
rob! 16
@11: Try Fort Collins instead (or in addition).
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on February 20, 2014 at 1:12 PM · Report this
17
All that money came from selling stolen patients meds... It's sick. And now Hick is gonna spend 40 million for MORE reefer madness propaganda? Only idiots would buy in one of these stores when it's free amongst friends.....when their extortion tax goes towards law enforcement and reefer madness....
Posted by Kathleen Chippi on February 22, 2014 at 1:11 AM · Report this
Fifty-Two-Eighty 18
@17, you really need to put the joint down for a while. Stolen medical records? What medical records? It's legal here (and a cash-only transaction). There are no medical records involved.
Posted by Fifty-Two-Eighty http://www.nra.org on February 22, 2014 at 2:49 AM · Report this

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