Colorado Legal Marijuana Nets Millions
LEGAL MARIJUANA COLORADO
Pulls In MILLIONS of DOLLARS In Legal MARIJUANA TAX Revenue
They say crime pays? Not exactly. Legalize a former crime and tax it and it really pays.
Just ask Colorado. Perhaps not so awkwardly labeled the “Highest State,” Colorado pulled in $2 million in taxes related to the sale of recreational marijuana…in January 2014 alone. Combined with taxes on sales from medicinal marijuana, the state pulled in nearly $3.5 million in pot-related tax revenue. If that trend continues, the state will see more than $40 million in additional tax dollars in 2014. To put that in perspective, that’s approximately 1% of the total annual budgets for Delaware, South Dakota, Montana or West Virginia.
There are a couple of layers of tax in place on the sale of marijuana. To begin with, there’s a 10% state sales tax imposed on retail marijuana and marijuana products on top of 2.9% in existing state sales tax (this is in addition to any local sales tax). As with other taxable products in Colorado, the tax is on the final consumer and cannot be included in the advertised price. Together with local sales taxes and special taxes, the tax imposed on consumers in Denver on the purchase of marijuana can reach as high as 21.12% (downloads as a pdf). Denver County accounted for more than half of all medicinal and recreational marijuana related sales tax revenue, while outside of the capital, taxes can be closer to 13%. No matter the level of tax, sales were pretty healthy statewide, with $14.02 million worth of recreational pot sold.
Colorado, the first state to tax legalized recreational marijuana sales, expects to bring in an estimated $98 million in revenue this year, exceeding the state’s original expectations by 40 percent.
The state began levying sales and excise taxes on recreational marijuana on Jan. 1, 2014. Moody’s Investors Service, in a report released Friday, said legal sales in Colorado will reduce the size of the black market and revenue from legal sales will mean more tax payments flowing into state coffers.
The funds are slated for treatment, school construction and deterring young people from using the drug. School districts will likely get $40 million, or nearly 30 percent, of the projected $134 million in total marijuana tax revenues. New revenues will only make up 1.4 percent of the state’s available general fund.
“There’s been a lot of buzz around legalization,” said Andrea Unsworth, a Moody’s analyst. But she cautioned that tax revenues were “still a very small fraction of the state’s overall budget. It’s not going to sway things too much in one way or another.”
In March, the Colorado Association of Chiefs of Police asked the governor for 10 percent to 15 percent of marijuana’s total tax revenues, citing the need to police unlicensed sales of the drug, diversion to other states, and drivers under the influence of marijuana, among other costs, the report noted.
The only other state to legalize recreational marijuana, Washington, will begin marijuana sales in June.
In addition to the Mexico City measure, lawmakers from the leftist Democratic Revolutionary Party (PRD) introduced a bill in the federal House of Representatives that would allow prescriptions for medical marijuana at the national level. The measure would also permit states to regulate the drug’s production, distribution and sale.
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The proposals represent a coordinated effort to deviate from punitive drug policies in Mexico, which has suffered unprecedented levels of drug-related violence during the United States–led war on drugs. Roughly 70,000 people have been killed in Mexico in drug-related violence since 2007, when then-President Felipe Calderon launched a military offensive against drug syndicates
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