Colorado's Pot Tax Tally Has Lessons For Other States – CBS Local
DENVER (AP) — Marijuana makes money. But legalizing it doesn’t eliminate the black market or solve a state’s budget problems.
Those are the lessons from Colorado’s first full year of tax collections on recreational pot. The year-end report, released Tuesday, tallied about $44 million in new sales taxes and excise taxes from recreational pot.
Add fees and pre-existing taxes from medical pot, which has been legal since 2000, and Colorado’s total 2014 pot haul was about $76 million.
Colorado was the first government anywhere in the world to regulate marijuana production and sales, so other governments are watching closely. Estimates varied widely for how much money Colorado would make, and the final hard numbers have important lessons for other states considering legal weed markets.
THE MONEY DOESN’T COME OVERNIGHT
Colorado started selling recreational weed on Jan. 1, 2014. But its first month of sales resulted in only $1.6 million for the state. By December, that figure was $5.4 million.
The reason for the increase? Regulatory delays. Red tape meant stores opened slowly, with many municipalities waiting months before allowing pot shops to open.
In Washington state, delays were even more pronounced.
Washington voters legalized pot at the same time Colorado did, in 2012. But retail sales in Washington didn’t start until June, with stores slowly opening and sales increasing each month.
Things will speed up as more states legalize pot and can look to Colorado and Washington for regulatory guidance. But legal weed isn’t an overnight flood of tax money.
“Everyone who thinks Colorado’s rollin’ in the dough because of marijuana? That’s not true,” said state Sen. Pat Steadman, a Denver Democrat and one of the Legislature’s main budget-writers.
FIGURE OUT HOW TO TAX IT
Washington and Colorado set vastly different tax rates, both based on a percentage of the pot’s value.
The states then had to immediately set a value for a product with no legal sales history. What’s the right price?
Colorado’s pot regulators have struggled to establish a wholesale pot price to collect excise taxes.
“Taxing a percentage of price may simply not work,” said Pat Oglesby, a former congressional tax staffer who now studies marijuana’s tax potential at the Chapel Hill, N.C., Center for New Revenue.
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He pointed out that the two latest legal weed states — Alaska and Oregon, both still working on retail regulations — … – Click Here To Visit Article Source