Legalization of marijuana is a natural experiment in how a newly-legal market responds to heavy regulation. First results are in on tax revenue harvested by Colorado. (lousy pun intended)
2/11 – AP at ABCNews – Colorado’s Pot Tax Tally Has Lessons for Other States – Report is in on how much tax revenue was realized from recreational marijuana.
$44M from recreational and $32M from medical.
Articles says revenue in first month (1/14) was $1.6M which grew to $5.4M in December. Annualized, the December revenue would be $64.8M a year.
How does that compare to forecasts? Here’s what I mentioned previously:
1/10 – Wall Street Journal – In Colorado, Legal Pot Fails to Meet Predictions of Supporters, Critics / Forecasts of Tax Windfall, Dire Consequences Don’t Prove Entirely True – Estimates of state’s FY 15 revenue from recreational marijuana:
- $100M – from the Governor’s office in 2/14
- $ 67.0M – previous estimate from state’s economists
- $ 58.7M – current estimate from state’s economists
So the result is below all estimates.
Actual results would be an absolute surprise to all government officials. Also, zero surprise to me.
Most entertaining comments in the AP article are state officials wondering how to push people to buy highly tax recreational marijuana instead of lower taxed medicinal marijuana.
Hmmm. Imagine the conversation:
How do we force people to pay higher prices that they have to. Those silly people choose the lower priced of two functionally equivalent products. Sure wish we could make them to pay for the higher taxed stuff. We want, um, need more money.
Article also suggests that as more states legalize marijuana, the amount of pot tourism will drop, which will drop tax collections. I’ve read elsewhere (and won’t bother to look for a link), that perhaps half of the sales are to out-of-state residents. That means the tax collections in December ’14 could be the best it gets.