This may come as a shock to you, PeakNation™ but the tax proceeds from the legalization of marijuana – an all-cash business with a giant loophole for medical use – are far lower than expected. Color us shocked. From the Denver Post report:
“Colorado’s tax collections from recreational marijuana sales in the past fiscal year came in more than 60 percent below early predictions, and now a state lawmaker says it may be time to reconsider the tax formula.”
According to initial estimates, the new tax was supposed to generate $33.5 million through the fiscal year, which ended earlier this summer. The actual amount brought in? A paltry $12 million.
Colorado State Rep. Dan Pabon is chairing the “what do we do with this alleged pot windfall” committee and has suggested that perhaps that medical marijuana issue is to blame. Here’s the deal – recreational pot users must pay 25% sales and excise tax to the state of Colorado as approved by voters last November. Medical marijuana sales are taxed at just 2.9%. Saving 22% on pot? Of course people will opt for medical marijuana, instead of recreational. More from the Post:
“A market study for the Colorado Department of Revenue says the lower-taxed medical-marijuana market, which continues to outpace the recreational market in sales, is to blame. Rather than pulling consumers out of the medical-marijuana market, the recreational market has largely feasted on tourists and people who previously bought pot on the black market.”
Why even commission a study on this? Just use common sense. The other issue is that it’s an all-cash business. There are legislators working on some kind of solution, but currently, the industry is basically un-bank-able. Perhaps marijuana outfits are not reporting all the income they receive. And, why would they – can the government even track the funds flowing through this industry?
We’re not saying that legalization is a bad idea, but only Democrats would ignore the ramifications of an aggressive tax regime on tax revenue. Will the left finally acknowledge what we’ve been saying all along – tax something and it will go away?