Colorado: Huge Tax Revenue Collected From Marijuana

Source:  Time
September 16 2015

Tanya Basu @mstanyabasu

It clocked in at $70 million last fiscal year alone.

Denver, Colorado- Interior of a commercial medical and recreational marijuana grow facility.

Denver, Colorado- Interior of a commercial medical and recreational marijuana grow facility.

Pot is a boon for tax revenues in Colorado, outpacing revenue from alcohol taxes in the fiscal year ending on June 30.

Colorado collected almost $70 million in marijuana taxes during that time, nearly double the $42 million collected from alcohol taxes. The state had a tax holiday for marijuana on Wednesday, an event that was welcomed by consumers and producers alike.

The sales tax holiday underscores the sheer productivity of marijuana taxes, Mason Tvert, director of communications for the Marijuana Policy Project, told the Colorado Spring Business Journal.

“Marijuana taxes have been incredibly productive over the past year, so this tax holiday is a much-deserved day off,” Tvert said. “This will be the one day out of the year when the state won’t generate significant revenue. Over the other 364 days, it will bring in tens of millions of dollars that will be reinvested in our state.”

Tvert’s prediction isn’t an exaggeration, as Colorado’s data indicated that the 10% retail tax on marijuana and 15% excise tax for large wholesale weed has been fruitful.

On the state’s one-day tax holiday, shoppers saved about $20 an ounce on Wednesday, but distributors saved roughly $300 a pound, with one grower telling ABC he “probably saved $45,000 before lunch.”

For a month-by-month breakdown of Colorado marijuana tax collections, click here.

Source:  Colorado Raised More Tax Revenue From Marijuana Than From Alcohol  Time

One thought on “Colorado: Huge Tax Revenue Collected From Marijuana

  1. There is no substitute for evidence and the evidence is in,namely, that marijuana production, distribution and sales are increasing and so too are the tax revenues from sales and excise taxes from retail and wholesale sales of weed in Colorado and other states where it is legalized.

    In fact at the end of the fiscal year June 30th the state of Colorado where marijuana was first legalized had tax revenues from sales of marijuana of $70 million compared to $42 million from alcohol. Additionally for the month of January 2015, tax revenues from sales of medical marijuana were nearly $1 million compared to tax revenues from recreational marijuana which were in excess of $3 million for the same period. The latter figures compared favorably with the tax revenues for recreational marijuana which in January 2014 were roughly about 1\3 of what they were in January 2015. However, the tax revenues from the sales of medical marijuana in January 2014 was roughly flat compared to the same month in 2015.

    Additionally, the tax revenues from marijuana sales for medical and recreational purposes for three states , namely Colorado, Oregon and Washington state where it is legalized was a combined $1 billion in the last year.

    Clearly, the potential tax revenues from the sales of weed for both medicinal and recreational purposes is enormous and barring a major catastrophe to huge quantities of marijuana crops and production and distribution facilities, it is hard to see how this growth trend in production, distribution, sales and consequently tax revenues for state and local governments which were smart enough to legalize it will stop particularly when there are willing consumers.

    This rising trend in tax revenues from marijuana sales in Colorado is also true in Washington state and Oregon. The latter will no doubt incentivize other states particularly those that are fiscally challenged to also legalize the weed to address particularly the revenue side of their budgetary woes.

    The latter issue of the budgetary troubles was no doubt one of the main issues which led to marijuana legalization in Colorado and other states where it is legalized. These states and the increasing number of others that are expected to legalize marijuana due to the forecasted high tax revenues from its sales and its demonstrated successes of marijuana to earn tax revenues will enable them to tackle a range of social and economic issues that they are currently unable to address because of their fiscal crisis triggered in large part by Wall Street’s initiated 2008 financial crisis which caused tax revenues to collapse in the states.

    The foregoing framework has some important lessons and implications for the states that make up the USA and those beyond its borders .

    First, perhaps one of the most obvious implication and lesson of the legalization of marijuana in those American states where it is now legal and those that in all likelihood will make it legal in the future is that tens of thousands perhaps hundreds of thousands of nonviolent pot offenders in prisons should be pardoned thus reducing millions of dollars in expenditures on police work, court and other expenditures to lock up marijuana users.

    Further, future marijuana users will not and cannot be persecuted because it will not be illegal to use marijuana either for medicinal or recreational purposes in several states where its use will be legal.

    As such more scarce tax dollars will be freed up for more important challenges in several of these states such as education, subsidies for foods for the poor, health care, research and development among others. The clear lesson here is that “necessity is the mother of invention” in that though not exclusively the fiscal crisis that largely resulted from the financial crisis of 2008 is perhaps the main factor that forced policy makers to find alternative ways to earn tax revenues when property, income and sales taxes collapsed due to the collapse if real estate, jobs and purchases due to the crisis.

    Another implication of the legalization of marijuana in these United States is that so many tens of thousands of Americans who use marijuana recreationally will be able to freely consume weed and go to work creating wealth for themselves and for society.

    These Americans will no longer be a tax burden to others who pay taxes to keep them caged up for 1, 2,3 or 10 years for using a relatively small amount of this comparatively mild drug. In this regard, perhaps it is helpful to think about the opportunity cost of the hundreds of thousands of Americans who have been incarcerated over the decades for being in possession of usually small amounts of marijuana. What were and are the opportunity costs to the companies for which they worked and the American society as a whole in terms of the foregone wealth that was or is being lost in those states where marijuana is still illegal? How much more children could have grown up with the guidance and love of their parents who were incarcerated for trivial amounts of marijuana? How many billions of dollars of GDP ( i.e wealth) did America lose over these years by imprisoning so many thousands of its people for using or selling mostly small amounts of weed? The lesson in this regard is to recognize not only the millions of lives destroyed by the obviously flawed and parochial drug policy in the US but also to appreciate the significant loss of wealth, employment and incomes lost by decades of a silly drug policy driven largely by racism and a war on poor Americans, a disproportionately large amount of whom are blacks and other people if color.

    Thirdly and in light of the latter point, another implication of the legalization of marijuana is that American society has an opportunity to become a little bit more civilized by being less racist towards Africans or black people living within its borders. The latter means that the legalization of marijuana by default has the potential to eliminate the entrenched racial disparity between blacks and whites in America who despite having roughly about the same rate of marijuana use, blacks are about 4 times more likely to be incarcerated compared to whites.

    Thankfully, at least in regards to marijuana use, the legalization of marijuana in the states that have already made it legal and those that will no doubt make it legal because of its tax revenue and other potential, will probably see the elimination of racial disparity for marijuana use. The lesson for America and its odious prison industrial complex is that the legalization of weed will not only expose for everyone to see its racism towards its ” black citizens” but it also reiterates what all civilized human beings know, namely, that ” BLACK LIVES MATTER” yesterday, today and forever.

    Thus in this context, the legalization of marijuana can create the possibility for America to become more civilized by imprisoning less black fathers, mothers, sons, daughters, uncles and aunts who may now stay in their communities with their families to raise their children just like white people.

    Finally, the legalization of marijuana has another important implication and lesson in these United States of America. The implication in this context is that as in the case of Colorado, Oregon and Washington state where marihuana is already legalized, in other states that will likely legalize it to deal with their fiscal crisis, employment and business possibilities will arise also for tens of thousands and perhaps millions of people over time not solely from marijuana but from serval derivative products such as lip gloss, cosmetics, skin cream, juices, sodas, biscuits, sweets, butter, cloth and many other products that hitherto the legalization of marijuana were ignored as investment and job prospects. In other words, the legalization of marijuana has brought to daylight the enormous waste of human, capital and natural resources that capitalism in America has wasted for decades.

    The legalization of marijuana has opened the possibilities to make capitalism in America less wasteful and more efficient in realizing a rightward shift in the production possibilities frontier or PPF curve of the US economy by discovery of more resources hitherto ignored in the era of what will likely become the era of marijuana prohibition.

    The lesson in this context is that an open minded policy that seeks out human possibilities and growth is the way to go to avoid waste of scarce resources and stem the fiscal crisis in several states within the USA.

    The sovereign countries in this region and the world who for too long have been subservient to US drug policies by leaving idle their marijuana resources to get US Aid packages and passing grades for fighting marijuana cultivation and consumption should take copious notes from Colorado and other states that have legalized what the Jamaican Reggae star, Peter Tosh, once called “Jah plant.”

    “Legalize it and I will advertise it” Peter Tosh

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