Colorado is missing $21.5 million in marijuana taxes

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(Credit: CNN)

DENVER — Colorado is missing $21.5 million in pot taxes.

Voters legalized retail marijuana (pot for everyone, not just medical patients) in 2012. And they were told the state would pull in $33.5 million from two new taxes in the first six months of 2014. It turns out, the projections were way off. Here’s why.

Pot smokers are still buying on the black market: The state thought more people would migrate out of the black market. But only 60 percent of people who want pot in Colorado this year will buy it through legal channels, according to an estimate from the Marijuana Policy Group.

One big reason: Legal pot costs a lot more than illegal pot — mostly because of taxes and fees.

Legal retail marijuana is taxed more than 27 percent, so it’s easily cheaper on the black market.

And there’s more than one way smokers are scoring pot without paying taxes.

Some are likely procuring it under the table from medical marijuana patients who buy it on the up-and-up and then resell it illegally — depriving the state of tax revenue.

Plus, any Coloradan older than 21 can grow up to six plants for personal use. If they are selling it on the black market, that’s even more tax revenue the state’s missing out on.

More are buying medical marijuana: Medical marijuana is taxed far less than recreational pot, to the tune of 2.9 percent. On average 1 ounce of medical marijuana costs $200, while the price of an ounce sold for recreational use is $220, but prices vary widely.

And while Coloradans must visit a doctor to get a medical marijuana card, that currently costs just $15. About 23 percent of the estimated marijuana users in Colorado (or 2 percent of the state population) have medical cards, according to the Marijuana Policy Group.

The state won’t say how many more people got cards since retail pot was legalized, but the number is growing, according to state economist Larson Silbaugh.

Lawmakers were too optimistic in their revenue forecasts: State law requires the government to refund taxpayers if it collects more than expected.

Wanting to avoid returning money collected from retail marijuana sales, lawmakers made “rosier” projections, state lawmaker Jonathan Singer said recently.

To be fair, Colorado is in uncharted territory as the first state to legalize the drug for recreational purposes, and it’s only been six months.

While lawmakers are examining the the tax structure, “it’s too early to be worried,” state Rep. Dan Pabon said.



  • DJ

    They still collected 12 million in tax revenue that they wouldn’t have gotten otherwise…but watch them get greedy and start forcing changes designed solely for the purpose of preventing ANYONE from growing it or obtaining it without them getting their “cut”!

    • Mary

      I doubt that – but this would be a GREAT excuse to cut all tax payouts to cities/counties which have banned retail sales (especially in those counties where the amendment passed – for example, it passed 66.5% to 33.5% in Eagle County, but Vail has banned sales or it passed 79.1% to 20.9.% in San Miguel Country, but Norwood has banned sales, it passed 69.2% to 30.8% in La Plata County, but Durango has banned sales – and it was city councils that decided to ban).

    • Duke Paulsen

      Gee, I choose NOT to have anything to do with MJ. Does that mean the State will be mad at me because 1) I DON’T grow the stuff. 2) I DON’T smoke the stuff 3) I DON’T sell the stuff Hmmm???

  • Anonymous

    Colorado isn’t missing any taxes. In the article it clearly states that it was simply $21.5M short from their ESTIMATIONS of tax revenue when the law was passed. Then it describes how if they collected more than estimated, they would have to refund taxpayers. So they simply predicted higher to avoid refunding. Misleading headline is misleading.

  • Nocroman

    As in other states that are considering legalizing recreational marijuana only because politicians see dollar signs and NOT because it’s what the people want and it’s the right thing to do, reversing something that should never have been done in the first place especially by just one man.
    These states are creating their own problems! They are creating an atmosphere for greed, and deception.
    What they should have done is: Legalize marijuana for anyone over the age of 21 to grow, use in any form, and have as much on hand as the believe their needs will require.
    BUT, here it comes, IT WILL REMAIN ILLEGAL TO SELL MARIJUANA. You can give it to another adult age 21 or over, but you sell one molecule of the marijuana you have and it’s off to prison with you!
    Then you treat marijuana like alcohol when it comes to society. Public highs on’s can be arrested. High while driving or operation a motorized vehicle (including boats) get you a court date and possible incarceration, among other things.
    Give or sell to a person under the age of 21 and you can kiss your life away as that will be a life time sentence with NO parole. If a child steals pot from an adult, the court may grant that adult the right to administer corporal punishment and/or boot camp from 6 months or until the age of 21 if it is not the first offense.
    Now problems are gone, Law enforcement does not have any extra duties to enforce than they have now. Politicians will still have to live within their budget. and the people will have their true freedom to make their own decisions on marijuana restored to them.
    NOW, lets move on to the new version of the Obama health care bill Nancy Pelosi wants to pass that realty screws those over the age of 76. Oh and that EXEMPTS congressional members but makes all other Americans fall under this irresponsible law. Pelosi is asking congress and the senate to just pass it without reading it and just see how it works.
    Here’s one clause: People over the age of 76 must have the recommendation (permission) from their doctor to go to the hospital, if they do not have their doctors permission it will be considered outpatient treatment and they will have to pay for the full amount of the hospital visit. Medicare will Not pay for anything. doesn’t matter if your doctor is unavailable or you just had or are having a heart attack.
    Contact your congressman and senators today and let them know what you think of Nancy Pelosis’s Idea of medical treatment for Americans age 76 and older.
    P.S. This bill also grants medical care for all aliens whether here illegal of not.

  • Duke Paulsen

    Remember last November when Amendment 68 (I think, a correction would be cool) that part of the MJ $$$’s were to go towards “edumacation”??? The schools are gonna be P-O’d to the MAX!!!

    • Mary

      Amendment 64 was the one to legalize marijuana – and I believe it was in the 2012 election. Amendment 68 is the new amendment to allow race tracks (not just Arapahoe County, but the ones in Mesa and Pueblo as well) to add limited gaming (like slot machines). The claim is that the first full year will raise over $114 MILLION for education – so based on this “miscalculation”, I’m guessing we should knock down that estimate to about $40 million….

  • Sam

    What kind of an idiot writes these headlines? We were taught back in the day to make the story fit the headline, not mislead. So where is the money missing? Wrong projections do not equal missing.

  • Donnie LaBarr

    Pot prices are still held at peak prohibition price levels, that being about 100 times it’s worth apparently reflecting the state’s policy & thinking it won’t be resold; Then add tax and the competitors score. The legal weed on the shelf needs to be lower priced as tax is applied to volume, not price.

  • Chad Prins

    part of this is many Colorado city’s have banned recreational sales depriving the state of retail sales taxes leaving those residents in that area to grow their own or buy from the black market. If all cites towns would lift the moratoriums on retail sales the state would be closer to the projected tax incomes.

  • MJ ProperInc

    Why does everyone seem to misunderstand this issue? The personal use and assistance in the personal use of cannabis is guaranteed in A64. Thus, it’s not the black market if we the people grow our own cannabis for personal use, even if this includes sharing it with our friends and other like minded neighbors 21 years or older. Just because the retail establishments are only growing the stuff for money with the permission of the government does not make it the only way to legally consume cannabis in the state of Colorado (Thank GOD!). It certainly doesn’t set up a “black market” simply because some people choose not to use the retail shops as their way to acquire cannabis. To be very honest, who wants to consume cannabis that is produced simply for money? That’s why under the law we can supply ourselves with quality cannabis and not have to suffer the possible harm attributed to producing a product (cannabis) primarily for profit and tax. In fact like minded people who help each other consume cannabis could even choose to pay a monetary contribution of 15% to our schools if they so decide. That’s why the retailers want to create a “black market”, if everyone doesn’t capitulate to their “retail pot grown for profit and taxes” program they say we who help each other consume quality cannabis not grown for profit and taxes the black market. We’re not a black market by any stretch of the imagination. We are simply people making an honest decision to not consume something that is less quality and grown for the wrong motive than what we deserve. Let’s get it right, it’s the people who sell marijuana for profit (whether they pay taxes or not) that’s the black market. A64 states very very clearly that cannabis cannot be grown for sale. Remember, the only way the retailers can grow cannabis for sale is if they get permission from the government to violate that portion of A64.
    IF WE LET IT cannabis can have a very positive impact on our communities. Really the only thing we have to decide is whether we want to consume cannabis from a profit ideology or a community minded non profit construct.
    I’m just sayin!

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