The State of Colorado made a bold move in November of 2012, when the state's voters headed to the polls to vote on a referendum legalizing cannabis for recreational use statewide. The referendum was put together by those outside of the state government who favored legalization, and their rationale was as much concerned with the innocuous nature of cannabis as it was with the untapped financial bonanza that awaited the state if it would just tax legal sales. It turns out that their intentions are proving correct.
Colorado Expected Take in Just Over $1 Billion in Legal Marijuana Revenue
Colorado Gov. John Hickenlooper submitted a budget last week that was hotly anticipated largely due to its estimates concerning the revenue generated by legal cannabis sales within the state. Though the drug was legalized for recreational use at the end of 2013, it only became legal to purchase cannabis at stores in Colorado on January 1, 2014. For this reason, only a partial fiscal year will benefit from the tax revenue made off of each sale to consumers. For the 2014 fiscal year that ends this July, the government expects to take in just over $20 million statewide after allocation to educational programs as set forth in state bylaws.
Hickenlooper's estimates for the upcoming 2015 fiscal year, however, are the notable numbers that seem to have everyone talking. His administration estimates that total sales of recreational cannabis in the state of Colorado will total just over $1 billion in 2015, of which $101 million can be assigned to non-educational funding projects throughout the state. That's a significant amount of capital for Colorado, and it could make a real difference in terms of transportation investment, tourism, and even further investments in the state's public schools and top-ranked universities.
Hickenlooper also expects a downfall in cannabis related crime rate figures, as street dealers will be unemployed becourse of the now legalized supply chain.
Significant Segments of Marijuana Revenue Will Be Spent on Prevention
While it's notable that Colorado is experiencing exceedingly high levels of fiscal success thanks to the legalization of recreational cannabis, it's worth noting that a significant portion of the proceeds will actually be spent on efforts to curb cannabis use throughout the state. That paradoxical spending pattern is due largely in part to a series of government regulations and policies that were passed in 2013 as a response to the successful legalization vote.
As part of the budget for the upcoming fiscal year, Gov. Hickenlooper expects to set aside $500,000 of the proceeds for educational programs aimed at an information campaign that will curb use of the drug by minors throughout the state. That pales in comparison to the larger budget for cannabis education efforts targeting those under the age of 21. Originally established as a $45 million cannabis prevention fund for the fiscal 2013 budget year, Hickenlooper calls for that number to more than double as of July. The state will therefore spend up to $103.5 million on the campaign for the 2015 fiscal year.
Public Health and Law Enforcement Budgets Will Get a Boost
Colorado isn't allocating its revenue from cannabis sales only to educational programs that target the state's youngest potential users of the drug. In fact, it's increasing spending on public health campaigns and law enforcement efforts that are designed to ensure the drug is used sparingly, safely, and responsibly throughout the state. That breaks down into two major funding components:
- State and local public health agencies will get a larger share of the revenue during the upcoming year. Fiscal 2015 will see public health agencies having access to about $12 million for educational campaigns and outreach efforts.
- Substance abuse programs offered by local agencies will receive a significant amount of funding, estimated to be about $40 million for the upcoming fiscal year.
- As much as $29 billion will be given to state and local law enforcement agencies, which have requested the additional funding to effectively patrol the streets for "driving while high" incidents that could otherwise endanger the general public.
A Significant Boost for Colorado Coffers
Marijuana legalization is nothing short of controversial nationwide, but Colorado's estimated revenue stream from a policy of legalized pot has netted it significant financial benefits in just under a year's time. With $1 billion in extra tax revenue now coming in on an annual basis, the state makes a good case for the well-regulated legalization of a substance that has long been widely available to the public in dark corners of the public sphere.