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.
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.
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.
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.
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.