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Marijuana tax take nearly double expected in Colorado
- mason240 11y ago>Tax collected on marijuana sales came to $70 million (does not give the time period) How much does Colorado collect in taxes on cigarettes and alcohol? I can't find any numbers to put this into context.
- ericboggs 11y agoLooks like ~$200M in state and local tobacco tax revenue in 2012. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=403 http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
- lotharbot 11y agoColorado collected $42 million in alcohol taxes over the same time period. http://dailycaller.com/2015/09/15/colorado-just-became-the-first-state-in-history-to-collect-more-taxes-from-marijuana-than-alcohol/ http://dailycaller.com/2015/09/15/colorado-just-became-the-f...
- toomuchtodo 11y agoSeems like their alcohol taxes are far too low, considering how much more harmful alcohol is versus marijuana.
- 6502nerdface 11y agoOr their marijuana tax is too high (as it were).
- JonFish85 11y agoIf that's all the tax is meant to do, offset harm. Which is only one small part of the story, I imagine.
- TallGuyShort 11y agoI've had a hard time convincing many of fellow Coloradoans of how harmful alcohol is compared to marijuana. It's newly legal, so people fear it more irrationally.
- toomuchtodo 11y agoThis is what I use to get my point across. http://www.economist.com/blogs/dailychart/2010/11/drugs_cause_most_harm http://www.economist.com/blogs/dailychart/2010/11/drugs_caus...
- leesalminen 11y agoThis doesn't take into account the revenue the state gains through its vicious DUI/DWAI laws. I would venture to guess that number far exceeds $42 mm/annum.
- dupe576 11y agoIf you are going to include that, wouldn't you then have to include all the money it costs the state to pay for damages caused by drunken drivers?
- azernik 11y agoAccording to [1], $206M in 2012. [1] [http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=403 http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...]
- dsp1234 11y agoAccording to this Colorado DOR [0], this report [1] contains the following figures for Fiscal year 2013/2014 for alcohol excise taxes: Spirits: $26,512,197 Wine: $ 5,571,591 Beer: $ 8,784,975 For a grand total of $40,868,764. I did not look for figures for cigarettes. [0]- https://www.colorado.gov/pacific/revenue/colorado-liquor-excise-taxes https://www.colorado.gov/pacific/revenue/colorado-liquor-exc... [1] - https://www.colorado.gov/pacific/sites/default/files/Liquor%20Excise%20Tax%200115_1.pdf https://www.colorado.gov/pacific/sites/default/files/Liquor%...
- blazespin 11y agoYeah, it'd be interesting to also see how much less / more policing is required, drug rehab programs, anti-drug programs, loss economic behavior due to increased drug use, diversion of consumption from other taxable goods to MJ (say a decrease in alchohol tax revenue), etc. Hopefully much less policing is required, but I don't think it was particularly policed all that much to begin with. In fact, policing tax collection may have increased. Tourism revenue might see a boost though, but that may decrease over time if other states adopt legalization. It also may be offset by an increase immigration of drug users and emigration of non drug users (assuming you can accurately predict non drug users are more economically valuable than drug users) Just looking at the topline number I think is pretty meaningless. I think also couching legalization in term of economics might be setting things up for failure and it might make better sense to say it's just philosophically the right thing to do(??)
- cryoshon 11y agoThese are critical parameters that we're completely blind to. I'm pro-legalization myself, because I think the data will ultimately support it as being the best option, but we need to check that hypothesis with reality.
- mulletbum 11y agoShouldn't there be an aspect of "what is right?" Just because taxes are more or less, revenues increase or decrease, we were putting a huge financial burden and physical burden on a drug that is no worse than alcohol. I think that is the top consideration, what is right, not which way is more financially helpful. (Not trying to be argumentative here, sorry if it sounds that way. It feels like this point is heavily missed)
- soylentcola 11y agoI think a big part of the focus on tax revenue is "marketing". I only say that because a decent subsection of US society would oppose cannabis (or any recreational drug) on principle if it was only a moral issue. By focusing on more objective benefits, legalization proponents are able to bypass some of the "moral" opposition. Basically, for people like me, morality would dictate that it's wrong to arrest or imprison a person for doing something that is, at worst, a bit unhealthy. Still, just as many people split the other way and think it's immoral to promote "vice" at all. The balance may shift but it's there. Contrast that with the economic argument and you'll have a hard time finding people who would choose revenue going to the black market over funding something useful or lowering the tax burden on those who don't buy cannabis.
- JustSomeNobody 11y agoChicago and Detroit should take note. Allow drugs and tax the hell out that sh.
- valarauca1 11y agoDetroit decriminalized possession (up to 1 oz.) in 2012 to reduce police work. I'm agreeing with you, they should (I'd rather it be statewide). I'm just offering clarification, it wouldn't be a large spending decrease in terms of enforcement.
- ohitsdom 11y agoIf you tax it too much, I'd imagine that'd increase viability for a black market.
- pavel_lishin 11y agoBut a black market already exists.
- atom-morgan 11y agoAnd taxing it enough ensures those black markets don't disappear.
- peter303 11y agoRegulations is a secondary taxation on legal dealers. Businesses have to pay high license fees, buy required security, keep records of EVERY PLANT (rfid tags). Its still profitable enough and safe enough from police harassment that there about 900 businesses.
- atom-morgan 11y agoYeah but black markets can still exist even if it is profitable for some. From what I've read some consumers are turning to black markets because it's cheaper than licensed stores [1]. [1] http://www.cnbcprime.com/marijuana/video/pot-after-hours-the-black-market/ http://www.cnbcprime.com/marijuana/video/pot-after-hours-the...
- larrik 11y agoI feel like this article assumes a ton of context. I guess Colorado has a tax free day today? I had to infer that from article, since it doesn't explain it, just references some "accounting error". Which might be the prediction being off? Who knows!
- Zelphyr 11y agoYes, CO has a tax free day on cannabis only. My understanding is they reaped too much in taxes and their laws are such that they have to give the overage back. The tax-free day is a way to do that.
- omni 11y agoThat's some bizarre logic. Tax-free day doesn't "give back" anything, it just slows down the rate at which they exceed what they thought was acceptable.
- kej 11y agoYou're both right. There's a tax-free day to slow down the amount of tax brought in, but state law does require returning unexpected tax windfalls that exceed inflation and population growth. Wikipedia has a good overview: https://en.wikipedia.org/wiki/Taxpayer_Bill_of_Rights https://en.wikipedia.org/wiki/Taxpayer_Bill_of_Rights
- MCRed 11y agoYes, from what I understand the Colorado law has a requirement that taxes justify their rate based on the revenue they will raise. This tax far exceeded the revenue, and so the constitution (or law or both) requires "payback" to the people for the excess tax revenue-- this comes in the form of suspending the tax until it can be lowered... and in this case this means the tax will be suspended for one day until the new lower tax goes into effect.
- xienze 11y agoThe bad news is that this amount of revenue will become the new normal, i.e., future budgets will always assume this amount of revenue or more. I think the novelty factor wearing off and other states legalizing marijuana will put a dent in this number in the future. So hopefully the government won't go too nuts assuming hockey stick growth.
- chimeracoder 11y ago> The bad news is that this amount of revenue will become the new normal, i.e., future budgets will always assume this amount of revenue or more. That's good news, not bad news (for legalization advocates). It becomes the new normal, which means that if anybody wants to reverse course, the burden is on them to find alternative sources for $50-100MM in tax revenue. And a major chunk of the tax revenue is explicitly earmarked for public education, which is makes it that much more difficult for a politician just to ignore the tax revenue and repeal Amendment 64 without finding an alternate source.
- xienze 11y ago> It becomes the new normal, which means that if anybody wants to reverse course, the burden is on them to find alternative sources for $50-100MM in tax revenue. That "alternative source" is invariably tax increases. Politicians aren't terribly clever about these sorts of things. > And a major chunk of the tax revenue is explicitly earmarked for public education That's not at all an iron-clad guarantee of how the money is spent, you may want to look up e.g., the North Carolina Education Lottery.
- hsod 11y ago> That "alternative source" is invariably tax increases. Politicians aren't terribly clever about these sorts of things. Tax increases have political cost (i.e. a politican or activist would have to expend political capital) so I'm not sure what your point is
- natrius 11y agoIf the novelty factor starts to wear off, just smoke again so everything seems novel.
- AaronFriel 11y agoThis is good news and bad news. The funding for schools will be a boon to education in the state, and that's certainly not bad. However, I expect will almost certainly lead to decreased education funding from other revenue sources, and ultimately place education footing on less solid ground for years to come. It was brilliant PR move to earmark the tax revenue for education, there's no doubt about that. It's very hard to argue with such things, and many other states have opted to dedicate certain "sin taxes" to select public works. For example, earmarking some funds for veterans affairs out of state lottery tickets as my state (Iowa) does, or education as many more states do. On the surface, this seems like a brilliant way to justify revenue collection for what many citizens would consider unseemly or undignified. It is an effective sales pitch to say to a voter, "You may disagree with marijuana legalization, but it will bring in $50 million dollars to state schools." The problem is that budgets will adjust to incorporate this earmark for future years. That is, education budgets are likely to reflect this revenue for future years. That's precisely what has happened in so many states where state lottery revenues have been earmarked for education and other noble causes. John Oliver's Last Week Tonight had an excellent take on a similar topic: the "sin tax" of state lottery tickets. See here: https://www.youtube.com/watch?v=9PK-netuhHA https://www.youtube.com/watch?v=9PK-netuhHA It is wonderful that marijuana taxes are going to a good cause. It is dangerous to make education funding dependent on a volatile tax source, and the evidence suggests that is exactly what will happen.
- aggie 11y agoAre sin taxes really that volatile? I don't have good data, but many people suggest marijuana (as well as alcohol) is counter-cyclical and demand is relatively inelastic. http://www.marketwatch.com/story/amid-the-stock-market-volatility-turn-to-the-stability-of-the-marijuana-market-2015-08-27 http://www.marketwatch.com/story/amid-the-stock-market-volat... edit: This study suggests alcohol is actually pro-cyclical (in Scandanavia). [pdf] http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.185.64&rep=rep1&type=pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.185...
- AaronFriel 11y agoEven a small (4-6%) change in revenue can wipe out inflationary increases in funding for education. Even if they're counter-cyclical, the evidence is that replacing education funding with something more volatile is risky, because it's replacing consistent funding with something that is based on market dynamics. In the case of marijunaa, it's largely cultural.
- peter303 11y agoThe distribution of pot taxes indicates who the tax payer customers may be. First there is the location of taxes. The resort town bring in a fair amount indicating tourist types dont want the effort or danger of developing black market. Second is almost half the revenues come from refined products like edibles and vapes. Some people think smoking is either stinky or cancerous. A detailed revenue report comes out every year. It is a developing industry and quickly changing.
- SEJeff 11y agoI've always thought that the biggest win of legalizing marijuana is simply that it keeps a lot of the low level thugs off of the street. You know, the run of the mill thugs who might or might not lace the marijuana with cocaine or something worse to keep users coming back? If it is legal to get those thugs will have to shift to the harder stuff which pushes them more underground and off of the most common streets. This makes it safer for a lot of users who would use regardless of legality.
- kentrado 11y agoThe good stuff that keeps users coming back is more expensive than the weed itself. I wish mine was laced with coke. Haha.
- gregpilling 11y agoI have never met the dealer like you describe. Most pot dealers are in love with weed, and want to talk all day long about this flower vs that one. I would guess that you personally are not purchasing marijuana?
- SEJeff 11y agoGuess it depends on where you or where your friends leave. A lot of my former Army buddies smoke marijuana to deal with PTSD. Several of them go to dealers just like I describe and are not the biggest fans of it. Just because you've seen something doesn't mean it doesn't exist. I'm by no means saying that is the norm, only that it definitely exists, and I'm all for any way of getting them away from people who just want to get baked.
- wingerlang 11y ago> ...run of the mill thugs who might or might not lace the marijuana with cocaine or something worse to keep users coming back? Has this ever ever happened?
- cjensen 11y agoColorado's budget is a $27 Billion per year. Marijuana taxes fund 0.26% percent of the budget. "Big new revenue source" is plainly not an argument for legalization.
- darkstar999 11y agoIf $70 million isn't a "big new revenue source" then what is? Have there been recent tax changes in any other states that have surpassed this?
- cjensen 11y agoSure: California recently increased it's sales tax by 1%. Sales Taxes are 30% of the California budget, so that equates to a 3% change in revenue. That's more than 10X the revenue generation of Marijuana Taxes.
- ac29 11y ago>California recently increased it's sales tax by 1% If by "recently" you mean 2009, then yes. However that went back down in 2011. CA State sales taxes have been within ± 0.5% of 7.75% since 1991 (aside from a 1 year dip to 7%) [1]. [1] https://www.boe.ca.gov/sutax/taxrateshist.htm https://www.boe.ca.gov/sutax/taxrateshist.htm
- dragonwriter 11y ago> Sure: California recently increased it's sales tax by 1%. Presumably, you are referring to the 1% temporary 2009-2011 boost during the budget crisis, from 6.25% to 7.25% > Sales Taxes are 30% of the California budget, so that equates to a 3% change in revenue. All other things being equal, assuming 30% of the budget is sales tax before the increase, a 6.25% to 7.25% increase in sales taxes is closer to a 5% overall increase in revenue.
- mzs 11y agoIt is, another example is the cloud tax in Chicago, $12,000,000.00/yr projected.
- xacaxulu 11y agoAttention all poor Southern states desperate for new revenue sources who coincidentally refuse to legalize, QC and tax something that people are already producing, trafficking, distributing and consuming inside your borders.
- brandonmenc 11y agoThis indicates that they should probably cut the tax in half.
- godgod 11y agoBan it! We're getting rich off a level 1 drug. /sarc