- On September 1, 2016
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The recent DEA decision to keep marijuana illegal at the federal level was a setback for the pro-legalization movement. Nonetheless, evidence of growth in Colorado’s economy after legalization may provide an alternative argument in the future.
Colorado marijuana sales in 2015 propelled state revenue to untold heights, leaving the state to scramble for ways to spend this new influx of capital. At LiveGreen, we believe this economic evidence may prove to be the tipping point in the future of the national marijuana legalization debate.
Recreational marijuana is subject to a series of taxes in Colorado, giving the state an effective tax rate of 29 percent. The taxes include:
- Local Sales Tax: The local rate is uniform at 2.9 percent throughout the entire state, and is the rate charged on all purchases.
- Marijuana Tax: Consumers pay an additional 10 percent marijuana sales tax for any product that contains marijuana.
- Excise Tax: Retailers must pay a 15 percent excise tax on marijuana, based on the market value of the purchase, with the tax passed along to consumers. The tax is applicable to flowers, trim and plants.
Medical marijuana is exempt from all but the local sales tax.
Where Does The Money Go?
Taxes from legal marijuana presented Colorado with a robust revenue stream, and the state turned the money towards public services. Each city and local jurisdiction also receives an allocation to spend as it chooses.
On the nearly $1 billion in recreational and medical marijuana sales in 2015, the state raised more than $135 million in taxes. Residents of Colorado benefited with:
- $35 million in earmarks for new school construction
- Infrastructure upgrades
- Safety and security renovations to public buildings
- College scholarships
- Expanded water rights
- New homeless shelters and homeless programs
- Funding for healthcare workers in schools
Marijuana revenue by state shows that Colorado is not the only state experiencing an economic boom as a result of marijuana. Washington and Alaska also linked marijuana taxes and economic boosts, and officials in all three states are considering lowering the tax rate, because the revenue is so out of line with projections.
Revenue through Savings
At LiveGreen, we believe that income from marijuana sales is only half of the equation in an economic impact study. The other side examines how much money the state saves on enforcement after legalization. Here, we find the numbers truly staggering.
Since legalization, Colorado has saved millions of dollars through:
- 8,000 fewer arrests for possession at a value of $300 per case
- 2.2 percent drop in total violent crimes
- 10 percent decrease in burglaries
- 8.9 percent fewer property crimes
- Funding for youth prevention programs
The total economic impact, from the taxes collected, and the savings made, was more than $200 million for 2015, and those numbers do not account for the number of new, legal jobs that were created in the marijuana sales pipeline.
At LiveGreen, we support recreational and medical marijuana use with the highest quality products in the Denver area. Contact us or stop by one of our four locations to learn more.