VS Strategies hosted a news conference July 19, 2017, to discuss the “major milestone” of Colorado receiving $500 million in tax revenue from cannabis sales. (Cannabist staff)

‘Major milestone’: Colorado hits half a billion in cannabis tax revenue

Marijuana advocates are trumpeting a Colorado milestone: More than $500 million in revenue for the state since recreational cannabis sales started in 2014.

The medical and recreational cannabis tax revenue benchmark — achieved in May 2017 — was hailed Wednesday in a report from VS Strategies, the new public affairs and lobbying firm affiliated with cannabis law firm Vicente Sederberg.

The report highlights publicly available marijuana tax data from the Colorado Department of Revenue. It also outlines how some of those funds have been spent or allocated on both the state and local levels.

“It’s a meaningful milestone,” said Brian Vicente, a Vicente Sederberg partner and co-author of Amendment 64, the 2012 ballot measure in Colorado to tax and regulate adult-use marijuana. “Colorado continues to be an example for the world.”

VS Strategies hosted a news conference Wednesday to discuss the report. Speakers included Rep. Jonathan Singer, D-Longmont, who sponsored several marijuana-related bills in this past legislative session, and Lauren Arnold, chief executive of Adoption Exchange, an Aurora-based nonprofit that serves as a bridge to find adoptive families for children in foster care.

Adoption Exchange will receive a $116,000 grant next year — and could receive another $116,000 in each of the following two years — from the Tony Grampsas Youth Services Program, which was allocated more than $3 million in marijuana tax money.

The grant will fund an expansion in Adoption Exchange’s mentoring program for older youth who are close to “aging out” of the system, Arnold said. The program that served 10 children and teens from Adams County last year is expected to serve between 25 and 40 children and teens from the Denver metro area, she said.

Singer, who backed a new law adding post-traumatic stress disorder as a qualifying condition for medical marijuana, lauded how marijuana tax revenue not only was directed toward substance abuse and mental health programs, but also served as a key budget fix to address rural hospital funding cuts.

“Marijuana has become the thread that holds our state budget together,” Singer said.

In response to the VS Strategies report, Smart Approaches to Marijuana (SAM), a nonprofit organization that opposes legalization efforts, stated that the costs of drug use are greater than any financial revenue benefits Colorado may reap.

“Like the tobacco industry before it, the Colorado marijuana lobby is touting marijuana as the panacea for every contemporary challenge Colorado faces,” Kevin Sabet, SAM president, said in a statement. “The truth is, the health and safety costs caused by the commercialization of marijuana far outweigh any revenues collected.”

The marijuana taxes in Colorado also do not fully address the nearly $18 billion in capital construction needs for schools through 2018 and the state budget deficit, Sabet said.

Through May 2017, Colorado marijuana shops have sold upward of $3.6 billion of medical and recreational cannabis flower, edibles and concentrates, according to The Cannabist’s calculations of state tax data.

The taxes and fees from those sales totaled $76 million in 2014, $135 million in 2015, $198 million in 2016, and $96 million through May of 2017, according to Colorado tax data.

That money is distributed to a host of different areas, including school construction grants, substance abuse programs; marijuana enforcement; and youth mentoring services.

Economists, notably Chris Stiffler of the Colorado Fiscal Institute, have frequently cautioned that marijuana tax collections represent a sliver of the state’s $10 billion general fund and cannot solve perennial budget woes.

“With the increased tax rates on marijuana, Colorado is expected to collect $255 million from marijuana this year, that’s about 2.3 percent of total state tax collections,” Stiffler said Wednesday via email. “So by no means has marijuana tax revenue been able to supplant the traditional sources of revenue like sales tax and income taxes.”

Of the “sin taxes,” marijuana tax revenue in Colorado exceeds collections for both cigarettes and liquor, he said. That can be partly attributed to Colorado having some of the lowest sin tax rates among other states — the 8-cents-per-gallon excise tax on beer is the third lowest among U.S. states and the Centennial State’s cigarette tax of 84 cents per pack ranks 37th — and marijuana tax rates being updated.

“Marijuana tax rates are relatively new and we’ve updated them to the world of 2017, while taxes on cigarettes and alcohol haven’t been modernized as recently as marijuana,” he said.

Economists and state budget officials are anticipating that marijuana industry sales will continue to grow, but eventually plateau.