Benefits of Colorado's Marijuana Tax
In the months prior to the landmark vote that legalized marijuana in Colorado in January 2014, proponents were not excited due to the realization that recreational marijuana use would be legal in the state. However, the tax revenues were projected to spring forth from this fresh, green bounty. There has been significant benefit for one particular subset of Colorado’s economy including the public school system.
Colorado school system is the major marijuana tax revenue recipient
When Colorado voters approved recreational pot taxes, those taxes included a 15 percent excise tax on wholesale marijuana, used specifically for school construction. 70 million dollars in total marijuana tax revenues were projected, with 40 million going to school construction and 30 million going to state funds and law enforcement.
Monthly school revenues have increased correspondingly. The Colorado marijuana tax has already benefited the school system more than it did in all of 2014 when compared to May 2015.
In 2014, schools benefited from an excise tax that gave them $13.3 million for the entire year. This year, $13.6 million has been set aside for schools in just the first five months, January through May 2015.
Voters were enticed by the promise that schools would greatly benefit when they voted to legalize in 2012. At this point the school tax revenue figure proffered was $40 million. School tax revenues have subsequently increased, from $400,000 to $500,000 a month for three consecutive months in 2015. Schools are expected to see at least 25 to 30 million dollars in tax revenues this year. However, they could see more this year, if current revenues are any indication.
Some current realities built-up against the potential economic benefits of the marijuana tax.
That’s good news, but it doesn’t touch the halcyon days of experts’ pre-legalization predictions yet. While experts once rejoiced that this new and legal source of income would generate more than $70 million in tax revenue for the state between June 2014 and June 2015, recent predictions saw residents receiving small tax rebates, among other things. The reality has been a little more cautious.
Colorado generated significant recreational marijuana sales in 2014 – 17 ton worth. Medical marijuana sold even more, 50 ton worth. Sales were approximately $700 million last year, with a roughly equal split between medical marijuana at about $386 million, and recreational marijuana at about $313 million. This year, retail sales averaged $42.5 million a month between March and May, which would be the highest since October 2014.
Proposition BB will either let the state keep millions of dollars in marijuana tax money or will refund it to citizens and marijuana retailers. If November 2015 voters accept Proposition BB, nearly $60 million in marijuana tax revenue will go to youth services, drug abuse prevention, law enforcement and school construction. If they reject it, it will go back to marijuana retailers and customers, due to a sales rate tax reduction on recreational marijuana.
One could assume that there will be a boom to Colorado’s economy, as well since what goes back to customers and retailers invariably goes back out into the economy as dollars spent. It is a win-win situation for all.