
Marijuana tax take nearly double expected in Colorado - happyscrappy
http://www.bbc.com/news/world-us-canada-34272291
======
AaronFriel
This is good news _and_ bad news. The funding for schools will be a boon to
education in the state, and that's certainly not bad. However, I expect will
almost certainly lead to decreased education funding from other revenue
sources, and ultimately place education footing on less solid ground for years
to come.

It was brilliant PR move to earmark the tax revenue for education, there's no
doubt about that. It's very hard to argue with such things, and many other
states have opted to dedicate certain "sin taxes" to select public works. For
example, earmarking some funds for veterans affairs out of state lottery
tickets as my state (Iowa) does, or education as many more states do.

On the surface, this seems like a brilliant way to justify revenue collection
for what many citizens would consider unseemly or undignified. It is an
effective sales pitch to say to a voter, "You may disagree with marijuana
legalization, but it will bring in $50 million dollars to state schools."

The problem is that budgets will adjust to incorporate this earmark for future
years. That is, education budgets are likely to reflect this revenue for
future years. That's precisely what has happened in so many states where state
lottery revenues have been earmarked for education and other noble causes.
John Oliver's Last Week Tonight had an excellent take on a similar topic: the
"sin tax" of state lottery tickets. See here:
[https://www.youtube.com/watch?v=9PK-
netuhHA](https://www.youtube.com/watch?v=9PK-netuhHA)

It is wonderful that marijuana taxes are going to a good cause. It is
dangerous to make education funding dependent on a volatile tax source, and
the evidence suggests that is exactly what will happen.

~~~
fpgaminer
Sure, but we didn't earmarking marijuana taxes for education so that we could
improve education. Any informed voter would know that. We did it so that we
could get uninformed/uneducated voters to pass the legislation. Now, I don't
mean "uninformed/uneducated voters" in a negative way. Most voters, even
intelligent ones, are classed as uninformed/uneducated when it comes to most
topics. Because really, who has time during their day to research all of these
measures? And funding education sounds good. So a little "end justifies the
means" was used here to make moves towards ending the war on drugs.

I want to re-iterate, using marijuana taxes for education had nothing to do
with improving education. Those who have studied the educational system in the
U.S. know that funding is not the primary issue. The system itself is sick,
and not from malnutrition. It is misguided, is mis-incentivized, and in many
ways corrupt (mostly due to incompetence).

For example, in the past few years when schools have gotten additional
funding, they have tended to spend it on technology. They buy iPads for
students and teachers, smartboards, and online learning management services
(Blackboard, Google Classroom, etc).

None of those things have had a meaningful impact on the quality of education.
The schools continue to underpay teachers, promote hostile work environments,
continue to promote overpriced, poor quality textbooks, don't feed their poor
students, force teachers to buy their own supplies, make students sick by not
running AC, accept donations from their teachers and parents, and the list
goes on.

What I'm getting at is that additional funding for education is not, and will
not ever be about improving the quality of education. If voters want to
improve education they need to focus their attention on fixing the system
itself first. Funding should only ever be increased in tandem with efforts to
root out bad actors and steer our sinking ship of education away from the
rocky harbor it's currently in.

Blindly increasing educational spending is the same as blindly donating food
and money to the proverbial "Africa". In a similar manner, the corrupt
governments where that money and food goes steal those resources to continue
to fund their wars and terror. We need a Bill & Melinda Gates for education,
not more fund raising.

~~~
pa5tabear
I think you're very wrong about educational funding. There's a high
correlation between a schools relative wealth and its relative academic
success in each state (mainly tied to property taxes). Yes, I'm sure there are
exceptions, and yes there's lots of room for systematic improvement. But more
money could absolutely make a difference at the underperforming schools.

~~~
TrevorJ
I'm really curious if this is true, or if there's some correlation =/=
causation stuff at play.

~~~
ams6110
Your hunch is correct. Wealthy areas have a demographic that supports
education. When kids have stable homes, with parents who care about them and
their education, schools do well.

When kids move three or four times a year, never know if they are going to eat
dinner that night, get beaten or ignored at home, have parents on drugs or in
and out of jail, it doesn't matter how much money you pour into the schools.

~~~
paulryanrogers
So if the parents are 'on' pot does that mean we've come full circle?

~~~
robotresearcher
In states where pot is legalized, parents that smoke it will probably not be
in jail.

------
blazespin
Yeah, it'd be interesting to also see how much less / more policing is
required, drug rehab programs, anti-drug programs, loss economic behavior due
to increased drug use, diversion of consumption from other taxable goods to MJ
(say a decrease in alchohol tax revenue), etc. Hopefully much less policing is
required, but I don't think it was particularly policed all that much to begin
with. In fact, policing tax collection may have increased.

Tourism revenue might see a boost though, but that may decrease over time if
other states adopt legalization. It also may be offset by an increase
immigration of drug users and emigration of non drug users (assuming you can
accurately predict non drug users are more economically valuable than drug
users)

Just looking at the topline number I think is pretty meaningless. I think also
couching legalization in term of economics might be setting things up for
failure and it might make better sense to say it's just philosophically the
right thing to do(??)

~~~
cryoshon
These are critical parameters that we're completely blind to. I'm pro-
legalization myself, because I think the data will ultimately support it as
being the best option, but we need to check that hypothesis with reality.

~~~
mulletbum
Shouldn't there be an aspect of "what is right?" Just because taxes are more
or less, revenues increase or decrease, we were putting a huge financial
burden and physical burden on a drug that is no worse than alcohol. I think
that is the top consideration, what is right, not which way is more
financially helpful.

(Not trying to be argumentative here, sorry if it sounds that way. It feels
like this point is heavily missed)

~~~
Phlarp
Alcohol is heavily taxed, and as any liquor store owner will tell you, it's
taxed at every possible opportunity: production, distribution and end user
sales.

We should be striving to bring overall tax rates for tobacco and marijuana up
to match alcohol.

~~~
chipgap98
Marijuana has an incredibly high tax in Colorado. IRC its like 25%

~~~
moonchrome
25% incredibly high ? Some European countries have higher VAT than that :(

~~~
gingerlime
nitpick, but I think only one country has higher VAT rate than 25% - Hungary
with 27%

source:
[https://en.wikipedia.org/wiki/European_Union_value_added_tax](https://en.wikipedia.org/wiki/European_Union_value_added_tax)

~~~
moonchrome
Fair enough - there are several countries that have 25% (my country included)
so I should have said >=

------
xienze
The bad news is that this amount of revenue will become the new normal, i.e.,
future budgets will always assume this amount of revenue or more. I think the
novelty factor wearing off and other states legalizing marijuana will put a
dent in this number in the future. So hopefully the government won't go too
nuts assuming hockey stick growth.

~~~
chimeracoder
> The bad news is that this amount of revenue will become the new normal,
> i.e., future budgets will always assume this amount of revenue or more.

That's good news, not bad news (for legalization advocates). It becomes the
new normal, which means that if anybody wants to reverse course, the burden is
on them to find alternative sources for $50-100MM in tax revenue.

And a major chunk of the tax revenue is explicitly earmarked for public
education, which is makes it that much more difficult for a politician just to
ignore the tax revenue and repeal Amendment 64 without finding an alternate
source.

~~~
xienze
> It becomes the new normal, which means that if anybody wants to reverse
> course, the burden is on them to find alternative sources for $50-100MM in
> tax revenue.

That "alternative source" is invariably tax increases. Politicians aren't
terribly clever about these sorts of things.

> And a major chunk of the tax revenue is explicitly earmarked for public
> education

That's not at all an iron-clad guarantee of how the money is spent, you may
want to look up e.g., the North Carolina Education Lottery.

~~~
hsod
> That "alternative source" is invariably tax increases. Politicians aren't
> terribly clever about these sorts of things.

Tax increases have political cost (i.e. a politican or activist would have to
expend political capital) so I'm not sure what your point is

------
mason240
>Tax collected on marijuana sales came to $70 million (does not give the time
period)

How much does Colorado collect in taxes on cigarettes and alcohol? I can't
find any numbers to put this into context.

~~~
lotharbot
Colorado collected $42 million in alcohol taxes over the same time period.

[http://dailycaller.com/2015/09/15/colorado-just-became-
the-f...](http://dailycaller.com/2015/09/15/colorado-just-became-the-first-
state-in-history-to-collect-more-taxes-from-marijuana-than-alcohol/)

~~~
toomuchtodo
Seems like their alcohol taxes are far too low, considering how much more
harmful alcohol is versus marijuana.

~~~
TallGuyShort
I've had a hard time convincing many of fellow Coloradoans of how harmful
alcohol is compared to marijuana. It's newly legal, so people fear it more
irrationally.

~~~
toomuchtodo
This is what I use to get my point across.

[http://www.economist.com/blogs/dailychart/2010/11/drugs_caus...](http://www.economist.com/blogs/dailychart/2010/11/drugs_cause_most_harm)

------
cjensen
Colorado's budget is a $27 Billion per year. Marijuana taxes fund 0.26%
percent of the budget. "Big new revenue source" is plainly not an argument for
legalization.

~~~
darkstar999
If $70 million isn't a "big new revenue source" then what is? Have there been
recent tax changes in any other states that have surpassed this?

~~~
cjensen
Sure: California recently increased it's sales tax by 1%. Sales Taxes are 30%
of the California budget, so that equates to a 3% change in revenue. That's
more than 10X the revenue generation of Marijuana Taxes.

~~~
dragonwriter
> Sure: California recently increased it's sales tax by 1%.

Presumably, you are referring to the 1% temporary 2009-2011 boost during the
budget crisis, from 6.25% to 7.25%

> Sales Taxes are 30% of the California budget, so that equates to a 3% change
> in revenue.

All other things being equal, assuming 30% of the budget is sales tax before
the increase, a 6.25% to 7.25% increase in sales taxes is closer to a 5%
overall increase in revenue.

------
SEJeff
I've always thought that the biggest win of legalizing marijuana is simply
that it keeps a lot of the low level thugs off of the street. You know, the
run of the mill thugs who might or might not lace the marijuana with cocaine
or something worse to keep users coming back?

If it is legal to get those thugs will have to shift to the harder stuff which
pushes them more underground and off of the most common streets. This makes it
safer for a lot of users who would use regardless of legality.

~~~
gregpilling
I have never met the dealer like you describe. Most pot dealers are in love
with weed, and want to talk all day long about this flower vs that one.

I would guess that you personally are not purchasing marijuana?

~~~
SEJeff
Guess it depends on where you or where your friends leave. A lot of my former
Army buddies smoke marijuana to deal with PTSD. Several of them go to dealers
just like I describe and are not the biggest fans of it.

Just because you've seen something doesn't mean it doesn't exist. I'm by no
means saying that is the norm, only that it definitely exists, and I'm all for
any way of getting them away from people who just want to get baked.

------
JustSomeNobody
Chicago and Detroit should take note. Allow drugs and tax the hell out that sh
__.

~~~
ohitsdom
If you tax it too much, I'd imagine that'd increase viability for a black
market.

~~~
pavel_lishin
But a black market already exists.

~~~
atom-morgan
And taxing it enough ensures those black markets don't disappear.

~~~
peter303
Regulations is a secondary taxation on legal dealers. Businesses have to pay
high license fees, buy required security, keep records of EVERY PLANT (rfid
tags). Its still profitable enough and safe enough from police harassment that
there about 900 businesses.

~~~
atom-morgan
Yeah but black markets can still exist even if it is profitable for some. From
what I've read some consumers are turning to black markets because it's
cheaper than licensed stores [1].

[1] [http://www.cnbcprime.com/marijuana/video/pot-after-hours-
the...](http://www.cnbcprime.com/marijuana/video/pot-after-hours-the-black-
market/)

------
larrik
I feel like this article assumes a ton of context. I guess Colorado has a tax
free day today? I had to infer that from article, since it doesn't explain it,
just references some "accounting error". Which might be the prediction being
off? Who knows!

~~~
Zelphyr
Yes, CO has a tax free day on cannabis only. My understanding is they reaped
too much in taxes and their laws are such that they have to give the overage
back. The tax-free day is a way to do that.

~~~
omni
That's some bizarre logic. Tax-free day doesn't "give back" anything, it just
slows down the rate at which they exceed what they thought was acceptable.

~~~
kej
You're both right. There's a tax-free day to slow down the amount of tax
brought in, but state law does require returning unexpected tax windfalls that
exceed inflation and population growth. Wikipedia has a good overview:
[https://en.wikipedia.org/wiki/Taxpayer_Bill_of_Rights](https://en.wikipedia.org/wiki/Taxpayer_Bill_of_Rights)

------
xacaxulu
Attention all poor Southern states desperate for new revenue sources who
coincidentally refuse to legalize, QC and tax something that people are
already producing, trafficking, distributing and consuming inside your
borders.

------
peter303
The distribution of pot taxes indicates who the tax payer customers may be.
First there is the location of taxes. The resort town bring in a fair amount
indicating tourist types dont want the effort or danger of developing black
market.

Second is almost half the revenues come from refined products like edibles and
vapes. Some people think smoking is either stinky or cancerous.

A detailed revenue report comes out every year. It is a developing industry
and quickly changing.

------
brandonmenc
This indicates that they should probably cut the tax in half.

