When in 2014, Colorado took the leap to become the first state in the United States to legalize the growth and sale of adult-use marijuana, it could not have wished for a better outcome. Fast forward five years later, and the industry is recording sales of nearly $2billion a year!
Data from the Marijuana Enforcement Division of Colorado’s Department of Revenue shows that total sales of medical and recreational marijuana in 2019 were $1.75 billion! By December 2019, recorded sales were $144 million, just $30 million less than the annual high of $173 million recorded in August but 6.7% more than December 2018’s sales.
Retail and recreational marijuana sales still outrank medical marijuana sales by far. $27 million worth of medical marijuana was sold in December, which is a blimp compared to the $116 million recorded for retail and recreational marijuana sales.
How is this happening?
For anyone wondering how Colorado got so lucky, the answer is simple: legalization of marijuana.
‘People are moving from the unregulated to the regulated market,’ says Truman Bradley, executive director of the Marijuana Industry Group. ‘As reefer madness goes away, as the stigmatism of cannabis reduces and people come over to the regulated market, I would expect that trend to continue.’
Mr. Bradley has a point, seeing as annual sales figures have increased every year since 2014, right up to an 18% increase from 2018 to 2019. Ever since the first-ever legal sale of recreational marijuana on January 1, 2014, the state has recorded $7.79 billion in sales alone.
Previously, marijuana was sold illegally on streets and in cover establishments across the state. Drug dealers were cashing in and using their newfound power to facilitate crime and illegal business.
Perhaps more notable is the fact that more people are willing to purchase marijuana in its different forms across the state. Marijuana hasn’t always been the drug people wanted to be associated with. Thanks to increasing national awareness about its benefits and a vote of confidence in form of state legalization, the negative stigma is starting to fade.
A boon for Colorado’s tax basket
Colorado’s marijuana sales boom has been a blessing for the state’s tax basket too. With every staggering amount recorded in annual sales every year, the state has been skimming off healthy figures for its tax books too. The marijuana industry may not be Colorado’s top revenue cash cow, but it sure is among the top ten.
According to state-provided data, the total tax collected from marijuana sales across the state totaled $302 million for 2019 alone. $1.2billion has been collected in taxes since February 2014. For January 2020, the state has already recorded a $26 million tax deposit from its combination of retail marijuana sales tax, state sales tax, licenses and other fees.
So where does all the money go?
With sales figures as high as Colorado records, one has to wonder where all the money goes. Thankfully, the state tries to be transparent and there is data to show that there is an improvement in way of life.
As early as 2017, economists were attributing 5.5% of Colorado’s employment growth in the marijuana industry. More than 17,000 new jobs were attributed to the industry by that point. The industry is responsible for over 3000 new small businesses ranging from dispensaries to cannabis cafes.
The state is not misusing its marijuana tax revenue either. Thanks to the Amendment 64 agreement, $40 million from the tax fund is given to a public school program, most notably the Department of Education’s Building Excellent Schools Today (BEST) fund. New schools have been erected and others revamped across the state.
Some of the marijuana tax money has been redirected into scholarship opportunities for Colorado students, such as the Pueblo County Scholarship Fund, which boasts $420,000 worth of scholarships each year.
More than just education
Colorado’s marijuana tax money is doing even more. The Denver Post reported in August 2017 that a bill had been signed into law to set up two new mental health facilities in Frisco and Montrose, paid for by marijuana tax money.
Lance Hernandez reported in The Cannabist a year later that $1.2 million of marijuana tax money was to be used to repave damaged roads in the city of Denver. He revealed that this was just part of the ‘$13 to 14 million’ the city received from its special tax on marijuana each year.
A summarized history of marijuana in Colorado
By 2014, Colorado was just another American sate grappling with reefer madness as illegal marijuana use grew more rampant. The state campaigned for the drug to become legal in what came to be known as Amendment 64.
Pro-marijuana campaigners pitched it as a solution instead of a mistake and promised that the money from taxes levied on marijuana would be rerouted toward supporting public education.
From the outset, the campaigners underestimated the value of the marijuana industry. Attorney Brian Vicente, who worked on the Yes on 64 campaign notes that ‘at the time, we’d been doing some pro-forma tax estimates and thought we’d have in the range of $60 million to $70 million in annual tax revenue’ from marijuana sales across the statewide.
No wonder the Amendment’s agreement dedicated the first $40 million collected in sales each year to public education programs. The campaign was successful, and Coloradans voted to legalize marijuana soon after. Numerous other states have since followed Colorado’s legalization attempt with varying degrees of success.
A case study of its own
From the moment its first sales figures were announced, Colorado became an example to watch and learn from. Any state looking to legalize cannabis can find valuable insights from Colorado’s approach to the modern marijuana movement.
‘As the first state to open recreational marijuana retail stores, Colorado provides a case study to examine the potential economic effects from legalization,’ write economists Alison Felix and Sam Chapman in a 2014 issue of the Rocky Mountain Economist.
Data on the impact of the marijuana industry on the state shows that the industry has had an impact on everything from employment rates to tax revenue to new business formation. With sales as high as $1.7billion, there’s no doubt that marijuana’s future in Colorado is brighter than ever.