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Here's Where Colorado Spends Its Skyrocketing Pot Tax Revenue

The first state to legalize recreational adult use of marijuana is now funding a host of programs with the proceeds.
Here's Where Colorado Spends Its Skyrocketing Pot Tax Revenue
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Colorado moved first into creating a regulated recreational marijuana system, and the state is starting to see the benefits in a huge way. According to numbers from the state, marijuana tax, license and fee revenue collected in 2016 almost hit the $200 million mark. To be exact: $198.5 million.

The money came off total marijuana sales of $1.3 billion. That’s a jump from $699.2 million in 2014 and $996.2 million in 2015.

Related: Congressional Cannabis Caucus Unites to Protect Marijuana Industry

That $1.3 billion number is expected to grow again in 2017. But where do state officials, who face problems with funding state programs, put the marijuana tax dollars?

How Colorado Spends Marijuana Money

Colorado charges three different taxes on marijuana sales: a 15 percent excise tax, a 2.9 percent tax on both medical and recreational sales, and a 10 percent “special sales tax” on retail sales. The state has a Marijuana Tax Cash Fund from which it distributes dollars. 

So where is the state using the tax dollars pouring in from pot? These places, based on appropriations approved by the state Legislature for fiscal year 2016-2017:

  • The first $40 million collected each year from the excise tax goes into BEST – the Building Excellent Schools Today fund, which will back construction projects to renovate or replace deteriorating public schools
  • More than $18 million went to the Department of Public Health and Environment to fund many different programs. They include the Marijuana Education Campaign ($7 million), a state-run program that “encourages young Coloradans to think about how their goals will be easier to achieve without marijuana.” Another $6.7 million went to substance abuse prevention grants.
  • The Department of Agriculture received $3 million for pesticide control, inspection services, 4H and FAA programs and other services.
  • The Attorney General’s office received more than $1 million, including $286,766 for a special prosecutions unit.
  • The Department of Education received $8.4 million for a variety of initiatives, including programs to stop bullying at schools and reduce the number of school dropouts. About half of the money went to the Early Literacy Competitive Grant Program.
  • The Governor’s Office received $216,944, most of which funded the Office of Marijuana Coordination.

Related: The Many Ways the Cannabis Industry Lacks Traditional Marketing Expertise

Not a Fix For Budget Problems

Despite the big numbers from the marijuana tax, it is a small drop in the state’s $9.7 billion general fund. The total state budget expands to $26 billion budget when federal funds and other cash are included, according to Chris Stiffler with the Colorado Fiscal Institute.

Colorado has faced issues with finding money for the school system, among other areas. Stiffler noted that any kind of “vice tax” is never the cure-all that many imagine it will be, and that nothing replaces the time-tested model of taxes on income, sales and property.

“There’s no gimmicking our way out of this problem,” he wrote about the state’s budget issues.

Follow on Instagram to stay up to date on the latest cannabis news. 

By Javier Hasse
From retailers to growers, producers, and suppliers, there’s a seemingly never-ending list of startup opportunities in this emerging market. In Start Your Own Cannabis Business, marijuana, biotech, and entrepreneurship reporter Javier Hasse introduces forward-thinking entrepreneurs like you to the industry and shares hard-earned tips and success stories from pioneers and visionaries in the marijuana industry.
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