WeedLex
Aug 24, 2016 9:10 AM

Can Marijuana Taxes Solve Our Budget Problems?

People get so used to hearing about the impressive tax revenues that cannabis industry has brought to the local budgets of the states with legalized recreational weed, that it actually tricked some of them to thinking marijuana taxes can solve all the problems of their neighborhood. Just as it was with the legalization of casinos and lotteries.

In each state across the U.S., the entire revenue system is based on three different kinds of taxes: income, property, and sales taxes. And marijuana tax revenue is only a tiny part of the total. This is why the real numbers are not as huge as some headlines say. And apparently, marijuana-related taxes do not bring enough money to fill all the gaps in local budgets.

Colorado

Unbelievable levels of marijuana sales and impressive numbers of tax revenues recreational weed brought to Colorado's budget made headlines numerous times. As a result, Coloradans started to think that their community has enough money to solve virtually any problem―from giving an additional funding to local schools to building new hospitals or giving extra scholarships to some talented students.

Colorado Students Awarded Cannabis Tax Scholarship
Colorado Students Awarded Cannabis Tax Scholarship
Pueblo County, Colorado, has awarded 25 local high school students with a college scholarship financed by the funds generated from cannabis excise taxes.

But when it comes to marijuana sales, both medical and recreational, the cannabis-related businesses should pay the regular Colorado sales tax of 2.9 percent. In addition to that, recreational weed sales are subject to a 10 percent sales tax and a 15 percent excise tax.

So, all the taxes collected by Colorado on recreational weed sales represent less than one percent of the state's general fund. For example, in the fiscal year 2014-2015, Colorado received $77.9 million of recreational weed taxes. For comparison, the general fund of the state at the same period of time was about $9.7 billion. The total state budget is even larger―around $26 billion.

As you can see, the money Colorado gets from recreational weed taxes is just a drop in the ocean. Furthermore, there are only a few items on the budget that marijuana taxes may be spent on: schools in rural areas, marijuana education, and treatment programs, etc.

Oregon

In Oregon, the situation is quite similar to Colorado. In comparison to Colorado, Oregon marijuana sale taxes are higher―from 17 to 20 percent for recreational marijuana sold at recreational weed dispensaries to 25 percent for recreational marijuana sold in medical weed dispensaries. But even with higher taxes, Oregon is unlikely to gather enough money to solve all its financial problems.

Tax Law Paradoxes: Marijuana Tax Revenue Legal, Tax Deductions Outlawed
Tax Law Paradoxes: Marijuana Tax Revenue Legal, Tax Deductions Outlawed
When it comes to legalizing weed, there is a certain contradiction between the federal and local laws. While marijuana remains classified as a Schedule I drug and is illegal at the federal level, 25 states plus the District of Columbia have legalized it for either medical, or recreational purposes, or both.

In the first three months of 2016, Oregon has collected about $10.5 million in taxes from recreational marijuana sales. Some experts expect Oregon to collect up to $42-$43 million in taxes from recreational weed sales by the end of the year 2016. For comparison, Oregon's general fund for the 2015-17 biennium is about $17.9 billion, and the states total fund for the same period is $68.9 billion.

So, can additional $42 million help fill all the gaps in Oregon's budget? No. Just as additional $77.9 billion will not help Colorado fund every item on its budget. Although this extra money can help fund certain items, the taxes collected from recreational marijuana sales are not some miraculous solution to all the local problems and needs.

Comments
Disputed Cannabis Tax Revenue Used to Fund Scholarships
The cannabis industry is one of the most promising spheres nationwide. Since it attracts millions of dollars and provides significant profits, the industry is becoming an important source of taxes. However, current marijuana-related laws still contain plenty of disputable issues concerning the collection and use of pot taxes.
Jun 6, 2017 12:30 PM
Colorado Researchers Receive $2.35M in Grants to Study Recreational Weed Legalization Impacts
Colorado Department of Public Health and Environment has announced it will spend $2.35 million on funding seven separate studies that will become a part of Colorado's Retail Marijuana Health Monitoring Program. The main goal of the program is to examine the impacts of the recreational marijuana legalization on different areas of Coloradoans' lives.
Dec 17, 2016 12:15 PM
Colorado Students Awarded Cannabis Tax Scholarship
Pueblo County, Colorado, has awarded 25 local high school students with a college scholarship financed by the funds generated from cannabis excise taxes.
Jul 3, 2016 9:15 AM