How much did Colorado make from the sale of recreational marijuana in its first month on the open market? Roughly $2 million. A total of 59 businesses sold $14 million worth of recreational weed in January, reports the state Department of Revenue. This proves what marijuana legalization advocates have been saying all along; legalization will stimulate economic activity and divert money away from the black market.
“It’s like the end of alcohol prohibition. We don’t go to the alley to buy a six pack anymore. We go to stores. And that is what’s happening with marijuana,” Brian Vicente, a Colorado activist who helped legalize pot in CO, told Denver’s 9News. “This is revenue directly out of the hands of cartels. These tax numbers will probably grow over time, but since it’s a new market, we’ll have to wait and see.”
If the “highest” state in the nation continues selling marijuana at this pace it’ll welcome more than $40 million in additional tax dollars this year, claims Forbes’ tax expert Kelly Phillips Erb. “To put that in perspective, that’s approximately 1% of the total annual budgets for Delaware, South Dakota, Montana or West Virginia,” she says.
Keep in mind that the numbers for January may be skewed. Many buyers wanted to be a part of history and purchase legal weed as soon as it became available. And recreational weed will be more available as new recreational marijuana retailers open.
Calculating Colorado’s Take
Recreational marijuana is heavily taxed. In addition to 2.9 percent state sales tax voters enacted two additional taxes. This first is a 10 percent special sales tax. Lawmakers can adjust the rate between 0-15 percent. So far there’s been no talk of changes. There’s also a 15 percent excise tax assessed at the first sale—from grower to retailer. This tax is not “directly” charged to the consumer. However, it can be rolled into the overall price of the weed, it just can’t be mentioned on a sales receipt.
In January medical marijuana outsold recreational weed in Colorado by more than two to one. It generated a total of $31 million in sales, but Colorado only collected roughly $1.4 million. That’s because medical marijuana isn’t taxed as much as recreational marijuana.
Including licensing fees and taxes Colorado took in about $3.5 million from its burgeoning marijuana industry in January. So what’s happening with all that cash? Well, the state’s Joint Budget Committee plans to meet with lawyers today to discuss how to spend it. Voters who approved the taxes designated that the first $40 million go to school construction. If there is any remaining money, lawmakers will decide how to spend it.
As attitudes toward marijuana begin to change nationwide, a problem like deciding how to spend a windfall of cash as a result of its sales is a problem many lawmakers would like to have.
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