Since Colorado legalized marijuana for recreational use in January 2014, pot smokers have been lining up in the high state to fork over their cash for dope. Sales of the federally prohibited drug have not only allowed Colorado residents and pot tourists to get high; the tax revenue generated has been much higher than originally projected. The only other state that has legalized recreational pot is Washington and that state is rolling in weed tax revenue as well.
Colorado Governor John Hickenlooper has released a budget proposal that includes income projections from the 12.9 percent sales tax levied on recreational pot sales and the 2.9 percent on medical marijuana sales. Early projections of $70 million in tax revenue have been smoked by the current projections. Hickenlooper now estimates $98 million in tax revenue from pot users who have lined up to get there “high” on, and whose cash will help fund the coffers of the state’s budget.
Hickenlooper has earmarked the tax revenue from recreational and medical pot sales to fund health programs related to the use and abuse of drugs. This includes $45.5 million to educate Colorado’s youth who, despite the high state’s legalization of pot for recreational use are still being advised to, “Just say no” to getting stoned. During the writing of the legislative budget, Hickenlooper expressed that one of his biggest concerns was to protect children from any negative impact from the legalization of recreational pot.
In addition, substance abuse programs across the state will receive $40.4 million in funds to help people kick the habit. Another 12.4 million is earmarked for general public health including media campaigns designed to educate people about the risks of smoking pot.
An internet site that posts the market prices of pot shows that the cost of an ounce of pot in Colorado is approximately $600 this month. This high price means more profit for sellers and they are thrilled that their businesses are booming. However, with marijuana still a federally prohibited substance, pot sellers have not been able to take advantage of the tax write-offs that more traditional businesses benefit from.
There have also been banking conflicts due to government regulations that prohibit banks from supporting illegal activities, which on a federal level includes the sale of pot. Pot sellers have had to hang onto large amounts of cash, which has raised security fears and generally been disruptive to their accounting methods.
Despite the Obama administration’s recent distribution of guidelines to federal banks in both Colorado and Washington detailing how they might accept cash from the sale of pot, the banks are still hesitant to go against federal law for fear of prosecution. Senior Vice President Jennifer Waller of the Colorado Banking Association has stated that these guidelines are more of a red light than a green light to banks because the risks involved in accepting funds from the sale of drugs are clearly outlined. The bottom line is for banks, accepting drug money is still a crime and they could be held liable.
Despite Colorado’s tax boom from the sale of recreational pot, Governor Hickenlooper recently warned other states to be cautious about following the high state’s lead. Although rolling in tax dough is great for the state’s coffers, Hickenlooper admits that the repercussions of legalizing pot are still unknown and he calls it a ‘social experiment.” Further, he does not think governors should be in the position of promoting the use of a drug that does not make people, “smarter” or “healthier” and especially puts “young people” at risk.
By Alana Marie Burke
Follow me on Twitter