According to a report published by Colorado State University last month, the implementation of Amendment 64, which legalized recreational use of marijuana for adults and was passed in the November 2012 election, will contribute more than $605 million to the Colorado economy next year. This is estimated to add $130.1 million to state coffers during fiscal year 2014 – 2015.
On the ballot this fall will be special taxes for marijuana, necessary to help fund the regulation of legal sales. All told weed could face the following taxes:
- An excise tax levy of 15% of the wholesale value of marijuana
- A special sales tax of 15% on the retail sale of marijuana; and
- Extension of the state’s existing 2.9% general sales tax to sales of marijuana and marijuana
While a lot of these taxes sound appealing to a revenue-hungry Democrat controlled legislature, the costs of implementing and enforcing regulations around marijuana use has not been estimated, but it could be high. Additionally, with a lot of the marijuana industry having operated in the black market for years, there will naturally be numerous tax avoidance schemes in the early years of legalization.
The CSU study estimated the state GDP boost and incremental tax revenue using demand assumptions from the most recent National Survey on Drug Use and Health. The study estimated that approximately 554,000 Coloradans will consume more than 2.68 million ounces of marijuana legally in 2014.
Interestingly, the most current estimate (2011) of the size of the Colorado economy is $264 billion, according to the St. Louis Federal Reserve. The study noted that the estimated retail cost will be $185/ounce, and that as of February 2013, 108,951 Colorado citizens had current medical marijuana cards.
In Colorado, it would seem that consumer demand for this green product, at least, is high.