Colorado is raking it in from marijuana sales—to the tune of more than $3.5 million in taxes and fees in January alone, the state reported this week. About $2 million of that is from new taxes on recreational marijuana.
As the first state to get its recreational marijuana program up and off the ground (Washington will begin selling recreational marijuana later this year), this is the first report of revenue of this kind. The money comes from a combination of excise tax, sales tax and license and application fees, and here is the breakdown, according to figures from the Colorado Department of Revenue:
-a 15 percent excise tax on recreational marijuana wholesaler transactions brought in more than $195,000 in January;
-a 10 percent-per-retail-sale state sales tax on recreational marijuana and marijuana-related products brought in more than $1.4 million;
-a general 2.9 percent sales tax on recreational marijuana brought in more than $416,000;
-a general 2.9 percent sales tax on medical marijuana brought in more than $900,000; and
-licenses and fees brought in almost $600,000. Almost $500,000 of those came from medical marijuana, and just under $100,000 came from recreational marijuana.
Localities may also enact their own special local taxes on recreational marijuana. For example, Denver imposes an additional 3.5 percent special tax.
Last month, Colorado Gov. John Hickenlooper projected in a budget request to the Colorado General Assembly that marijuana-related revenue would reach $184 million for the 18-month period that ends June 30, 2015. If January’s collections are assumed to be constant for the next 18 months, or if $3.5 million is the maximum amount collected per month for the next 18 months, then the governor’s revenue predictions will fall short.
Some of the revenue is already earmarked to be put in a fund that aims to improve schools with unmet needs, as well as other construction needs. Still, while any revenue like this might appear to be a windfall for Colorado, the governor’s Feb. 18 budget request states that two things were kept in mind when determining budget requests for marijuana-related money: (1) that programming have a direct or indirect relationship to marijuana use, and (2), that the state does not create a situation where state or local government has an incentive to promote marijuana use.
As far as future revenues go, Barbara Brohl, executive director of the Colorado Department of Revenue, told The Denver Post that recreational marijuana sales met expectations so far, and that it could be April when marijuana-related revenue collections stabilize.
Continue the discussion on our Bloomberg BNA State Tax LinkedIn group: Do you think more states will legalize recreational marijuana to increase revenue?
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