What Happened?
Colorado officials estimate the state’s booming marijuana industry could surpass $1 billion in sales this coming fiscal year, with $610 million attributed to recreational sales alone. Starting in July, Colorado anticipates generating $134 million in taxes on recreational and medical marijuana in 12 months, and $99 million of the funds could be allocated toward substance-abuse treatment programs and other development plans.
So What?
According to the Colorado Department of Revenue, the state totaled $109,182,002 in marijuana retail sales in the first quarter of the 2013-2014 fiscal year, which in turn allowed Colorado to collect $3,049,637 in state sales tax. These are significant increases from the $94,317,220 in retail sales during the third quarter of the 2013-2014 fiscal year, which resulted in $2,615,495 in sales tax, and that figure is expected to keep rising.
If Colorado and other states considering legalizing marijuana sales strategize to use some of the tax revenues from retail sales to support treatment centers and education programs to prevent substance abuse, the remaining funds can create a strong boost to state and local governments in need of funding to support development projects.
In Colorado, for example, at least $40 million in tax revenue will be dedicated to school construction while other funds will be put toward public health programs, and healthcare initiatives, The New York Times reported.
Keep It Tight
While the increase tax revenues will boost access to valuable capital to support public projects, the resources required to oversee and regulate the new industry may offset a percentage of the financial benefits. Residents interested in launching a marijuana dispensary must meet a number of standards and regulations before they can start meeting the high demand for the product.
While strong interest was shown when legalization first passed, Colorado officials did not anticipate the long lines outside of the first dispensaries. Because of high demand, the state is able to tax the product three times throughout the sale lifecycle to benefit as much as possible from the new industry.
The Colorado Department of Revenue reported 136 marijuana store licenses were mailed at the end of 2013, and a recreational store must acquire both state and local licensure before opening up shop. As more stores continue to pop up across the state, with a high concentration in Denver, Colorado continues to implement strict rules for applying for licenses and how to sell the product.
Denver officials created a checklist that potential marijuana retailers must complete before operating regular business. The checklist includes:
- Background and name check through the Colorado Bureau of Investigators
- Retail marijuana license application
- Documents for license application appointment
- Retail marijuana license bond
- Retail marijuana licensing policies and procedures
Furthermore, Colorado residents with photo identification over the age of 21 can purchase no more than one ounce of pot in a single transaction. Out of state customers are limited to a quarter ounce at a time. The product cannot be consumed in public, keeping it to private property. In Colorado, an ounce is typically around $196, while Washington charges closer to $192 an ounces.
Modern Taxing
Gov1 has followed more than just the taxation on marijuana, but also sales tax on cigarettes, bullets and new roadways.