Marijuana tax won’t fix Colorado’s budget woes

Colorado's marijuana tax won't solve the state's budget problems.
Colorado's marijuana tax won't solve the state's budget problems.

DENVER – When voters in Colorado legalized recreational marijuana, a new industry emerged, along with a new state revenue stream.

According to early estimates from the Colorado Legislative Council, the state brought in more than $77 million dollars in marijuana taxes last fiscal year.

Alex Meyer, a research fellow with the nonpartisan Colorado Fiscal Institute, says that money is helpful for funding some school construction projects and a few other programs, but it’s not the panacea promised by pot legalization advocates.

“As much as people like to talk about how marijuana is going to be sort of a silver bullet to our budget problems, the amount of revenue it brings in is actually just kind of a drop in the bucket,” he says. “Marijuana brought in less than 1 percent of Colorado’s revenue to the general fund.”

Total state revenues last year were nearly $10 billion. Meyer says the state is still getting the lion’s share of its money the old fashioned way, through income, property and sales taxes.

He adds that so-called gimmick taxes from state lottery and gambling aren’t enough to fix the state’s fiscal problems.

The first $40 million in excise taxes on recreational marijuana are promised to the BEST program – Building Excellent Schools Today. Meyer says last year 25 schools got BEST grants to help with roof repairs and other capital construction projects, but another 23 school requests went unfunded.

The marijuana tax contributed $24 million, which pales in comparison with the state’s $4.1 billion in K-12 education funding, he says.

“The money that’s not allocated to BEST is distributed to marijuana-related enforcement, education, prevention and treatment programs,” he says. “So just about all the money is spoken for.”

As Colorado lawmakers work to resolve next year’s budget, which includes more than $370 million in cuts and almost $190 million in Taxpayer’s Bill of Rights (TABOR) refunds, Meyer says it’s important to keep marijuana taxes in perspective.

He stresses there’s no substitute for a thoughtful, balanced revenue system that has the flexibility to adapt over time to changing economic circumstances.


Photo credit: Blind Nomad, Creative Commons, Flickr


  1. ‘… state brought in more than $77 million dollars in marijuana taxes…’

    ‘The marijuana tax contributed $24 million…’

    So, over two thirds of that money went to bullshit ‘Just Say No’ lies & propaganda campaigns, instead of schools?

    Pot Nazis win again, eh?

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