Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Thursday, May 12, 2016

Marijuana sales and tax revenues keep going up and up in Colorado ... while tangible new serious problems seem still not to have (yet?) materialized

This new Denver Post piece, headlined "Colorado pot shops have already sold $270 million of marijuana in 2016," reports that "in the first three months of 2016, Colorado's pot shops sold more than $270 million of marijuana and related products." Here is more:

The state’s latest data shows that its marijuana shops sold nearly $90 million of cannabis in March 2016. The licensed stores sold more than $55 million in recreational marijuana and more than $33 million in medical cannabis in March, the latest month for which the department has released tax data for the industry. Totals for retail and medical marijuana dipped slightly in March after a bustling February, which was the state’s fifth most lucrative month for sales since they began in January 2014, according to Cannabist calculations and state data.

March 2016 totals for recreational pot sales are up 30 percent from March 2015, which shows that “marijuana sales remain strong,” said Christian Sederberg, an attorney for the cannabis industry. “As the regulated system continues to work, we’re also on pace to have over $40 million in excise taxes, meaning there could be additional taxes available from the excise tax to be used for something beyond the public school construction fund.”

Among the taxes collected on retail pot sales is the school-funding 15 percent excise tax on wholesale marijuana transfers, which amounted to $3.5 million in March. One of the cornerstones of the campaign that successfully ran Colorado’s pot-legalizing Amendment 64 says that the first $40 million raised by that excise tax will go toward school construction projects. That specific tax totaled $13.3 million in 2014 and $35 million in 2015, and industry analysts — Sederberg included — say they are confident it will top $40 million in 2016.

Colorado marijuana outlets sold more than $699 million of product in 2014 and more than $996 million in 2015. Year-over-year totals for taxes and license fees grew too, from $76 million in 2014 to $135 million in 2015. There are three types of state taxes on recreational marijuana: the standard 2.9 percent sales tax; a 10 percent special marijuana sales tax; and a 15 percent excise tax on wholesale marijuana transfers. For March, Colorado collected more than $11.3 million in recreational taxes and fees and more than $1.7 million in medical taxes and fees.

Intriguingly, this notable new Atlantic piece, headlined "The Failed Promise of Legal Pot: New laws on marijuana were supposed to boost tax revenues and free up cops to go after “real” criminals. But underground sales — and arrests — are still thriving," details that marijuana legalization in Colorado and other states has not yet completely eliminated the historic black-market realities of marijuana distribution.   Though I find useful this article's reminder that, even after legalization, there can be many persistent black market and prohibition problems, I also think the article highights reasons why we may expect marijuana sales and tax revenues to keep on increasing over time as more and more local marijuana consumers come to prefer engaging with the newer-and-always-innovating legal market over their older-and-surely-less-dynamic black market.

In addition to noting these sales and tax revenue trends, the headline of my post here is meant to flag the reality that we do not seem to have yet seen evidence of increasing serious new problems in Colorado to parallel the evidence of increasing sales and tax revenue.  If there were significant tangible short-terms harms that follow directly from legalizing recreational  marijuana and having robust retail sales, I think those harm would now start to become very obvious now nearly 45 months since Colorado voters enacted full legalization and 30 months into having retail outlets selling lots of this product.  Moreover, if there were  significant tangible short-terms harms that follow directly from legalizing recreational  marijuana, not only should they be evident by now, but they should be contining to grow and become even more evidence as legal sales continue to increase.

Critically, it is certainly possible that there are significant long-term harms for Colorado and elsewhere that can be linked directly to marijuana legalization and increasing legal sales, especially with respect to health concerns.  (The parallel here to tobacco should be clear: having lots of people smoke lots of cigarettes does not produce a lot of obvious short-term harms, but the long-term harms we now know are quite significant.)  But if sales and tax revenues keep going up and evidence of major problems are not yet materializing, it is going to be difficult to effectively campaign in other states against marijuana reform when the tangible cost-benefit realities in Colorado so far seem pretty darn good.

http://lawprofessors.typepad.com/marijuana_law/2016/05/marijuana-sales-and-tax-revenues-keep-going-up-and-up-in-colorado-while-tangible-new-serious-problem.html

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