When Colorado residents voted to legalize the sale of marijuana for recreational use, a few critics remained skeptical of the benefits that legalization would bring with regard to revenue generation. They need not have waited very long to see the benefits, as tax earnings from the marijuana industry raised an impressive $2 million in taxes in the first month of 2014. Those who continue to doubt whether the marijuana industry can provide serious revenue to a community need only to look at the model set by Colorado to put those doubts to rest.
Colorado and Washington are two of currently twenty states that currently allow the use of marijuana use for medical reasons. However the two states have gone a step further by allowing the recreational use of marijuana. In November 2012, residents of Colorado and Washington state voted to legalize marijuana use and possession for people 21 years and older. Colorado began allowing the sale of marijuana for recreational use on the first day of the New Year, January 1, 2014, in a now historic event publicized as “Green Wednesday”. Washington State for its part is expected to allow the sale of marijuana for recreational purposes later on in 2014.
Despite these developments, Marijuana remains illegal under federal law. In states where the marijuana industry is allowed to operate, sales are regulated in the same way as the sale of alcohol. In Colorado, local residents are allowed to purchase up to one ounce of marijuana, while out of state buyers are limited to a quarter of an ounce. Marijuana can also be consumed only on private property, and only with the approval of the owner of the property.
The taxation model applied to the marijuana industry is similar to that applied to alcohol sale as well. In a report published in the Denver Post, state officials expressed optimism at the revenue generating potential of the marijuana industry. They also announced plans to allot the $40 million generated by the industry to the building of new schools and educational facilities. According to Colorado Governor John Hickenlooper, revenues from the marijuana industry are also earmarked for use in the development of youth prevention centers, substance abuse treatment facilities, and public health offices.
It is uncertain just how many stores began selling marijuana in Colorado on January 1, 2014. What is known is that more than 130 stores were given licenses to sell marijuana, and 59 of these registered a combined $14 million in sales as determined from the tax returns. Keep in mind that the $2 million generated in taxes includes only establishments that sold marijuana for recreational purposes. If the medical marijuana shops were to be included, the total would be closer to $3.5 million.
Not everyone in Colorado accepted the marijuana vote quite so readily. Some communities remained adamant in their opposition to the sale of marijuana and refused to have it sold in their stores. Nevertheless, the revenues generated by the Colorado marijuana industry in the first month of 2014 alone is an undoubtedly compelling incentive–one which may cause other states to consider the legalization issue even more thoroughly.