Five years after it was legalized in Colorado, cannabis has made over $1 billion dollars of taxes in the state, but with hundreds of millions of dollars in taxes being collected each year, where is it all going? Colorado is expected to earn over $270 million dollars in marijuana-tax revenue this year alone, which lawmakers are currently fighting over.
Some are arguing that the money should go to a variety of programs and services in the state, while others argue the funds should go to the purposes that were promised to voters in 2014. At the same time, competition from other states and a plateauing of marijuana sales in the state is putting the Colorado cannabis industry through its first real test.
Where Does The Money Go?
In 2012, Amendment 64 promised to legalize the recreational use of marijuana and put the collected tax funds toward schools and drug education. When the bill first passed, the opioid crisis was still making its way up, with marijuana being still being considered the big bad drug.
People were okay with legalizing the plant, as long as the money went to teaching people about the plant. Five years after the first sale of marijuana in 2014, over $1 billion dollars of marijuana tax money has gone through Colorado, with last year accumulating over $251 million dollars in taxes alone.
“It has become a pool of money that you can just raid.”
Tax money currently goes to one of the 14 preferred pools that the state decided on, which includes education, public safety, public health, local governments and more.
The Colorado Sun puts that “$98 million, or 39%, was allocated to three funds that support K-12 education, with about $40 million of that earmarked for a school construction grant program known as BEST. $16.7 million, or 7%, was distributed to local governments. $12.4 million, or 5%, was retained in the general fund for discretionary spending.
The remaining $123.9 million, or 49%, was left for lawmakers to spend via the Marijuana Tax Cash Fund, with money going to a wide range of authorized categories, including behavioral health services, education programs, agriculture and housing.” However, some lawmakers only want the money to go to two areas: schools and opioid education.
Over 50 schools from the state have requested some construction for fixes and other safety-related measures that have long gone quiet. Altogether, over $800 million dollars is expected to be the price tag for the endeavor, however, only $40 million dollars can go to BEST. Zenzinger’s bill wants to change that and make it so primarily education-related expenses are covered by the cannabis tax revenue.
According to the Denver Post, most people already believe that marijuana money is going toward education, because that was the main focus behind the legalization campaign. However, when the bill was being penned, lawmakers underestimated how much money marijuana would bring to the table.
In Amendment 64, it reads that “The first $40 million in excise taxes — the tax assessed on a transaction between a wholesale marijuana grower and a retail outlet — would be used only for school construction projects across the state.”
$40 million dollars compared to nothing is a lot of money, but compared to $251 million, $40 million is a whole lot smaller. Compared to $800 million is almost tiny in scope. Which is why people like Zenzinger are asking for more.
They point to not only the promises originally made, but the worsening conditions of schools across the state, underpaid staff and deadly opioid crisis as the main reasons that they should get a bigger slice of the pie. However, if schools do get some more of the funds raised, other programs that have been benefitting will be forced to take some cuts.
The Money Hasn’t Just Been Sitting There
Even though lawmakers are fighting over where their marijuana tax money should go, the money hasn’t just been sitting there. Most of the money collected through the state taxes go into the Marijuana Tax Cash Fund, which is a depository for those specific funds. While half of the taxes go to pre-approved programs, like BEST, the rest of them go into the fund, which some Colorado lawmakers say is basically a piggy bank.
A significant portion of the funds are focused on social service programs, such as research into marijuana, behavioral health support, youth services and law enforcement. The funding these programs get from marijuana tax money would be cut if the money is re-oriented.
Where Does Colorado Go From Here?
Colorado’s tax woes can be traced back to the year it began because it was too successful. “At the time, we’d been doing some pro-forma tax estimates and thought we’d have in the range of $60 million to $70 million in annual tax revenue” from marijuana sales, attorney and marijuana advocate Brian Vicente told The Denver Post of the Yes on 64 campaign.
This larger than expected income is the reason that only $40 million dollars was written into the bill for education programs, meaning that while the industry grows, the funding has capped for schools. However, while the money may be causing headaches for those in the centennial state, the success of the marijuana industry should still help others get on board.