The very first day of legal marijuana sales in Colorado set a precedent for what could be expected revenue-wise. New Year’s Day 2014 saw lines forming out of legal marijuana shops and around the block, and several shops feared that their stock would be entirely depleted.
Though legal marijuana prices ran as high as $400 an ounce, people were willing to pay up in exchange for the long-awaited relief of finally being able to buy marijuana legally and use it in their own homes without fear of law enforcement breaking down the door.
How much tax revenue is projected from legal marijuana sales?
Amendment 64, the popular initiative which legalized recreational marijuana use, introduced some hefty taxes on it as well. An excise tax of 15% was imposed on the transfers from cultivation facilities to a marijuana stores. A further 10% sales tax, on top of Colorado’s 2.9% state sales tax and any additional local taxes, was introduced for buyers of retail marijuana, which is what has driven up prices so far above street levels.
The projected tax revenue from excise and sale combined was originally impressive, but has been blown out of the water as marijuana sales in Colorado approach $1 billion. Initial tax revenue predictions stood around the $70 million mark, but, as updated estimates have started pouring in, are looking to hit closer to $100 million, or possibly even as high as $134 million.
It’s not only recreational marijuana shops that are helping to rake in the cash. Despite the legalization of recreational marijuana, a system remains in place for medical marijuana patients in Colorado. Though medical marijuana is only taxed at 2.9%, it brought in over $9 million in taxes over the last fiscal year, and is expected to add another $10 million in the coming year.
What is the tax revenue being used for?
The tax revenue generated from legal marijuana sales is going to help Colorado in many different ways. $12.4 million of it is going to go towards health care programs and public health campaigns, while $40 million will be used for the construction of rural schools and the refurbishing of inner city schools.
A further $45.5 million is going to go towards teaching school children to stay away from marijuana. This was done partly at the behest of the current Governor of Colorado John Hickenlooper, who was opposed to the amendment and expressed concerns for negative ramifications it may have for children.
While marijuana has been extensively studied for its safety, one can hardly argue against erring on the side of caution when it comes to keeping it away from children who don’t require it for medical purposes. The legalization and regulation of marijuana is surely going to help in this regard more than marijuana criminalization ever did.
What’s important is that Colorado is allowing grown adults to make their own choices about their own, personal marijuana use, and that the state is going to benefit financially as a result of this sensible and long-overdue decision.