In 2012, Colorado passed Amendment 64, making recreational marijuana legal for adults 21 years of age or older. Amendment 64 allowed adults to possess up to an ounce of marijuana, and also required the state to set up a regulatory structure for the retail marijuana industry.
Since marijuana first started being sold recreationally in 2014, according to the Colorado Department of Revenue, sales have now surpassed $10 billion. Marijuana sales data shows a significant year over year increase in marijuana sales with $2.19 billion in sales in 2020, up from $1.75 billion in 2019.
Why is this great news for Colorado?
Besides adding to the “rocky mountain high”, recreational marijuana sales are a great source of tax dollars for cities and the state. Recreational marijuana is taxed at every step of the sales process. When it is first sold from a wholesaler to a retailer, it is taxed at 15%. It is then taxed another 15% when sold from the retailer to the customer. During this step, there is an additional 2.9% state sales tax, and cities also often add their own tax, usually upwards of 20%. According to the Colorado Department of Revenue, since 2014, they have collected $1.63 billion in revenue from marijuana taxes and fees, and this figure does not include the added city tax. According to the Denver Department of Excise and Licenses, since 2014, Denver has collected over $300 million in marijuana tax revenue.
Before you start getting upset hearing how much your recreational marijuana is taxed, just know that these tax dollars are actually going toward some incredible programs. According to the Colorado General Assembly, the state allocates marijuana tax revenue to the general fund. From there, 10% of the revenue from the 15% tax on retail sales is allocated to local governments. The remaining money is split as follows:
- 71.85% to the Marijuana Tax Cash Fund
- 15.56% to the General Fund
- 12.59% to the State Public School Fund.
The Marijuana Tax Cash Fund is required to be spent within a year after it’s collected and goes towards health care, health education, substance abuse prevention, and treatment programs, and law enforcement.
The 15% state tax on sales from wholesalers to retailers goes towards the Building Excellent Schools Today (BEST) Fund. This fund is used for renewing or rebuilding deteriorating public schools.
The way in which cities spend their marijuana tax revenue varies by city. Denver spends their marijuana tax revenue on affordable housing, education, enforcement, improvement to city and facilities, opioid intervention, and regulation.
Overall, Colorado surpassing $10 billion in sales is beneficial to everyone involved. Less marijuana-related arrests save taxpayer money, while simultaneously taking advantage of a previously untapped source of legitimate income. Next time you have a date with the ganja goddess, just remember, the money you spent was distributed across a wide array of hugely beneficial programs. Should you accidentally overindulge, I’m sure knowing that will certainly help with the paranoia!