Colorado Cannabis Tax Revenue Could Exceed Alcohol
March 3rd, 2014
Policy, Top News
Colorado legalized adult-use cannabis on January 1, 2014 and tax revenues have already exceeded expectations. Governor John Hickenlooper expects cannabis sales to reach $610 million next fiscal year which could bring in nearly $100 million in tax revenue. These funds are slated to be spent on prevention measures, substance abuse treatment, public health, and schools among other things to benefit the public good.
The full tax picture may be much greater though. In Denver, all sales are assessed at the standard 2.9% tax plus social state and local sales and excise taxes. These figures add up to nearly 29% of each dollar spent on cannabis ending up in government hands – a windfall by many standards. These figures add up to nearly double the tax revenue received from alcohol sales given that they are taxed at a much higher combined rate.
Despite these high taxes, consumer demand appears to remain very robust throughout the state. Many dispensaries have been forced to close due to a lack of cannabis, saying they could double sales if they had enough inventory to last. It’s also worth noting that these tax revenues are likely funds being taken away from organized crime and other alternative sources of cannabis that would not be spending the money on the public good.
Colorado’s successful legalization could lead to similar efforts in many other states that are running large deficits. For instance, Rhode Island Senator Joshua Miller has proposed legislation to change marijuana laws similar to Colorado to help close the state’s $100 million budget deficit. The reduced spending on enforcement of marijuana offenses – from lawyers to prisons – could also generate significant additional savings.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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