Marijuana is Bringing in Record Tax Cash for Colorado
If additional tax revenues are the proverbial carrot-and-stick that will convince state legislators across the nation to buy into the idea of legalizing marijuana, then Colorado’s recent numbers are sure to have lawmakers frothing at the mouth. We’ve been aware the grand experiment that is marijuana legalization, playing out in both Washington and Colorado, has been a success on some level. But new numbers show states could benefit even more than anyone predicted.
Colorado, which enacted its legal marijuana trade nearly two years ago, has been raking in tax revenues with surprising efficiency. But the most recent numbers from the state’s Department of Revenue show marijuana taxes are outweighing other revenue streams, even alcohol. Over the course of the past year, Colorado has seen $70 million in marijuana taxes filter into state coffers.
Alcohol sales? A mere $42 million.
According to a recent article from The Daily Caller, a big reason for the massive gap between the two is that Americans simply spend more money on cannabis, and cannabis-related products, than they do on either alcohol or tobacco. Citing market research from Marijuana Business Daily, it appears that in states where marijuana has been legalized, average spending on cannabis tallies up to $1,800 annually — in contrast to $450 on alcohol, and $315 on tobacco.
It’s important to keep in mind these figures only represent two states, both of which take a much more lax attitude overall toward marijuana use than other states. So, those figures could change as new data becomes available.
Either way, it’s clear that Colorado seems to have struck gold. In fact, the state has even decided to try and attract more potential consumers to the legal marijuana market by enacting a ‘marijuana tax holiday’. That ‘holiday’ took place on September 16, and led to a rather large spike in foot traffic and sales for the state’s marijuana businesses.
“They’ve been setting up doing their advertisements and telling their customers to come on down for special deals,” said Tyler Henson, president of the Colorado Cannabis Chamber of Commerce, per The Denver Post.
The results? An apparent home run for the Colorado industry.
Elsewhere around the country, the wheels are turning, albeit with less excitement than in Colorado.
In Washington state, the only other state to have enacted a legal cannabis market — although Oregon and Alaska are in the process of developing their own — there still seems to be a little too much meddling from regulators. As a result, the state is seeing lots of tax revenue, but probably not as much as it could if things were loosened up a bit.
Washington’s law is a bit more stringent than Colorado’s, and as a result, things have taken longer to coalesce. That’s not to say the experiment hasn’t been a success — it’s just been hamstrung a bit. A restructuring of marijuana tax policies should help clear that up with time, as will the opening of bordering Oregon’s industry.
Though Washington state isn’t producing the banner headlines that Colorado is, it’s yet another example that marijuana legalization is not only feasible, but a net positive for the state. Like Colorado, Washington’s opening of the cannabis market has allowed hundreds, if not thousands of entrepreneurs to open up shop, create jobs, and provide the state with a cut of the proceeds.
And as we’ve discussed many times, other states are taking notice. With two states having padded their budgets with hundreds of millions in extra cash in less than two years, it’s hard for lawmakers across the country to ignore the idea. Massachusetts and Ohio have been the latest to make a splash in the legalization conversation, and 2016 looks like it will an absolutely immense year for the legalization push.
If money talks, as we all know it does, then the numbers coming out of Colorado are basically screaming at voters and lawmakers: legalize now.
With many states facing budget shortfalls, and looking for new ways to get people back to work, legalization may present a solution.
Follow Sam on Twitter @SliceOfGinger