Legalizing marijuana is not a new issue by any means. And for the most part, it has been, and will continue to be, an uphill battle.
This is partly because it is currently classified as a Schedule 1 Illicit drug. This technically puts it on a par with other drugs like LSD, heroin or cocaine (1).
The FDA reserves this ranking for drugs that have the greatest potential for abuse and no substantiated medicinal value. However, proponents of marijuana say that based on these requirements, cannabis does not belong in this category and has been unfairly stigmatized.
Various pro-cannabis groups have been tirelessly working for close to 50 years to bring cannabis out of the dark. They claim that marijuana is nothing less than a miracle drug, completely undeserving of the bad rap it’s received for decades.
While they have been making progress little by little, their efforts finally paid off in a big way in October 2014. At this time, Colorado state officials legalized marijuana for recreational use.
With this legalization, however, miles of red tape and taxes became a part of the deal.
Colorado Marijuana Tax
People often think that simply legalizing marijuana (or any drug for that matter) is as simple as passing a law and the next day, it simply becomes legal.
But there is much more involved, and the process can actually take months if not years in some cases. For Colorado, for example, The Colorado Amendment 64, was passed by voters on November 6, 2012. It wasn’t’ until January 2014 that the recreational use of the drug became legal (2).
Not surprisingly, the state has received record levels of tax revenue since with the introduction of the Colorado Marijuana Tax.
According to the Department of Revenue (a state run office), records show that by the end of the 2015 fiscal year a whopping $996,184,788 worth of cannabis was sold in Colorado alone (3). This number only includes products sold between licensed and regulated marijuana sellers.
Those sales translated into more than $135 million in marijuana taxes and fees for 2015, up from $76 million since during its inception in 2014. The State further promised $35 million of this money would go to build new schools.
Colorado’s 2015 marijuana tax and sales totals also signify a “redemption” of sorts for every citizen who tirelessly fought to remove its illegal status. The success, represented by the influx of tax dollars, is proof to these groups that legalizing marijuana was a “no brainer” and in fact, should have been done years ago.
According to economic development statistics, the manufacture and sale of legalized marijuana has stimulated growth in many other areas, including new business ventures such as stores that sell cannabis, tools needed to manufacture it, and other industry related items. As expected, it’s translated into a pretty hefty tax boost for the state.
With this legalization, experts assert there has also been more cultural growth and acceptance throughout the state of Colorado. Municipalities have accepted the ruling and welcome the growth of new businesses and even the customers these businesses attract. Finally, legalization of cannabis has allowed people to utilize a regulated product safely, versus an illegal one that can be a gamble with respect to safety, purity and even sales.
A 2016 article in the Boston Globe writes, “Legalization has ushered in thousands of new jobs in the burgeoning industry, brought $135 million into state coffers last year, and ended the prohibition of a widely used substance.” (4). By all counts, it is a win-win scenario.
As of March 9, 2016, the state implemented several changes to the Colorado marijuana tax. It now makes up of a 2.9 percent retail and medical marijuana sales tax, and a 10 percent retail marijuana special sales tax. It also includes a 15 percent marijuana excise tax, plus any retail/medical marijuana application and license fees.
In total, the tax on legalized marijuana is just over 30 percent (30.43 percent to be exact). While this may seem hefty, and it is, it only works out to roughly 1.3 percent of the state’s $10.3 billion in general tax collections (5).
Like many state taxes collected, these monies can be dived up among various jurisdictions within that state. Afterward, local officials can determine where the money is best used. This year, Aurora, the third largest city in Colorado, claims the city will use over 33 percent of the $4.5 million it expects to bring in to support local not-for-profit homeless organizations (6).
Cannabis Gives Back
Cannabis has garnered a bad rap for years, but city council members in Aurora want to make sure the drug does some good.
So, over the next two years, they promised funds to be allocated to several non-profit groups:
- The Colfax Community Network, a non-profit group that supports families living in motels.
- The Comitis Crisis Center, which helps in-crisis individuals.
- Aurora Mental Health, which will receive new vans to be used for homeless outreach efforts.
The city also pledged $680,000 to be set aside for other vital city non-profit organizations and $2 million to be used to build a new recreation center (7).
Proponents of legalization are certainly happy. According to a November 2015 survey conducted by Quinnipiac University, 53 percent of Colorado voters believe legalizing marijuana has been good for the state (8).
While Marijuana may not be everyone’s cup of tea, legalization certainly has had quite a positive effect so far.