

Colorado Pot Tax Proving More Lucrative Than Expected - zvanness
http://www.slate.com/blogs/moneybox/2014/02/20/colorado_pot_tax_revenue_more_money_than_expected.html

======
bane
So let's do some back of the envelope math

Colorado: 5,268,367 people (2013 est.)

Pot Tax Revenues: $98 million

That's $18.60 per person.

Assuming demand is constant across the U.S. (which is probably not true, but
let's go with it)

U.S. population: 317,580,230 (current est.)

That's $5,906,992,278 in tax revenues for the entire country.

2014 is expected to be even bigger.

So what could the nation do with $6 billion+ extra dollars every single year?

Of course even a basic analysis of the situation shows that the money
earned/saved is far greater than this: reduced need for enforcement, reduced
prison requirements, reduced etc.

The U.S. spends about $74 billion per year on just prisons. What if we could
reduce that number by 1/3rd? I wouldn't mind an addition $25 billion/year
sloshing around in more productive uses (in addition to the $6b/year in sales
tax).

I'm sure there's some more detailed analysis on what the actual numbers might
look like, but I'm guessing nationwide, it's something nearing $100
billion/year of money that might be repurposed for things that aren't stupid.

~~~
derefr
Here's a longer, but still mostly back-of-the-envelope calculation:
[http://slatestarcodex.com/2014/01/05/marijuana-much-more-
tha...](http://slatestarcodex.com/2014/01/05/marijuana-much-more-than-you-
wanted-to-know/)

It turns out that the tax benefits pale in comparison to the slight reduction
in car accidents caused by drunk drivers (because pot use seems to displace
alcohol use.)

~~~
sounds
Well, that's not exactly what was said at
[http://slatestarcodex.com/2014/01/05/marijuana-much-more-
tha...](http://slatestarcodex.com/2014/01/05/marijuana-much-more-than-you-
wanted-to-know/) \-- but I appreciate that you linked there because with some
careful record-keeping, some actual data could be collected in Colorado.

Quoting now from [http://slatestarcodex.com/2014/01/05/marijuana-much-more-
tha...](http://slatestarcodex.com/2014/01/05/marijuana-much-more-than-you-
wanted-to-know/):

    
    
      Costs from legalization compared to current system: 200 kQALYs and $2 billion
      Benefits from legalization compared to current system: 260 kQALYs and $7 billion
    

Although it’s not going to be necessary, we can interconvert QALYs and dollars
at the going health-care rate of about $100,000/QALY ($100 million/kQALY):

    
    
      Costs from legalization compared to current system: 220 kQALYs
      Benefits from legalization compared to current system: 330 kQALYs
    

And get:

Net benefits from legalization: +110 kQALYs

Except that this is extremely speculative and irresponsible. By far the
largest component of the benefits of legalization turned out to be the effect
on road traffic accidents, which is based on only two studies and which may on
further research turn out to be a cost. And by far the largest component of
the costs of legalization turned out to be the effect on IQ, and we had to
totally-wild-guess the QALY cost of an IQ point loss. The wiggle room in my
ignorance and assumptions is more than large enough to cover the small gap
between the two policies in the results.

So my actual conclusion is:

There is not a sufficiently obvious order-of-magnitude difference between the
costs and benefits of marijuana legalization for a evidence-based utilitarian
analysis of costs and benefits to inform the debate. You may return to your
regularly scheduled wild speculation and shrill accusations.

------
gopalv
Ugh, is this going to look like Big Tobacco in 50 years?

Vice taxes and revenue streams to be kept alive for the district?

That's going to be such a kick-in-the-backside for everyone who just wanted to
decriminalize it & stop putting people away for years.

~~~
sudomal
I suspect that legalisation of weed is going to be a blip in history and
they'll heavily tax it to phase it out. It just doesn't make sense to
encourage people to breathe in smoke.

~~~
hershel
Marijuana is a drug that encourages people to be less political active(the
"laziness" effect) . I would think governments would like such a thing in
politically unstable times.

~~~
nerfhammer
I don't think governments have big evil long-term schemes like this

~~~
hmsimha
You forgot your sarcasm tag, I hope.

~~~
nerfhammer
Yes, governments are simultaneously short-sighted, cunning, inept, plodding,
plotting, shambling, scheming and carry out very long-term schemes. But
they're also short-sighted and can't do anything right. But also they do
nothing unintentionally and 20 things don't go wrong with their schemes. And
you can understand governments best by thinking of them as having the motives
of a single person in your hunter-gatherer band, who is too greedy and too
powerful who takes too much and doesn't give enough back. You can understand
governments as you would by trying to read the motives of a single person,
capable of thinking, coherency, making singular decisions, led by greed.
Basically governments have all the properties of a action movie villain. Think
of an action movie villain that isn't motivated by greed or power lust, just
like every political villain from all time ever. Taking too much and not
giving enough back; betrayal. Or, wait, was I talking about the Greek gods?
The natural world can also be understood as reading the motives of a person
with human emotions that never do anything by mistake. Think of a movie
villain that was more or less accidentally carrying out their misdeeds, mostly
coerced by circumstances, blundering along the way. That wouldn't be a very
fun movie to watch. Villains always fully choose their evil, no circumstantial
factors force their hand. Also Greek gods. And you can understand them by
imputing their completely human motives; they always plot and scheme. You have
to be able to guess the actions of the other members of your small hominid
tribe. Every movie villain explains his motives and his long-winded scheme
that would quickly fall apart in reality but that kind of realism wouldn't
make a good movie. Political villains however, are often as hopelessly inept
as incredibly as they are cunning and good at carrying out multi-generational
schemes. Scheming and plotting like a person would. Like Lothar over there by
the fire who doesn't give enough back from the hunt, or Runs with Horses over
there who is amassing so many alliances as to be a possible threat to my
alliances. Could he be planning to attack me, or take my stuff? Me, I care
only about the tribe, for others in the tribe, the Real People we should care
about, which also includes me of course. I've been doing a lot for the tribe
lately. Could you help me tomorrow to rebuild my hut?

------
SandersAK
The "think piece" part of this article, which makes up most of the text, is
pretty hilarious:

"A key question about the public health impact of legal marijuana is how does
it change alcohol consumption patterns. To the extent that legal marijuana
displaces legal booze purchases, you're going to see an offsetting decline in
alcohol tax revenue. Which would be fine—a big win for public health, in
fact—but not quite the financial bounty states may be hoping for.
Alternatively, if legal pot leads to a complementary surge in beer drinking,
you'll have lots of tax revenue but potentially large problems."

So we don't have any evidence or idea if this will affect booze sales, but you
know, it could! Also, if it doesn't, there could be other problems, just in
general for people...

~~~
johnbenwoo
Not saying it does, just "asking the question." Gotta love speculative
journalism.

~~~
Dylan16807
It's very clearly not providing an opinion guised as a question. It suggests
that it could go up _or_ down, and concludes that it is something to watch out
for, because these are two variables very likely to be connected.

------
jonathanmarcus
Marijuana should be legal because the US is supposed to be a free country and
there is no reason it should be illegal. Tax revenue is a dirty justification
that only demonstrates the extreme hypocrisy. It should never be the
justification for legality or illegality. The whole discussion about tax
revenue allocation is nothing more than red herring. A 25% tax is nothing more
than extreme government theft.

~~~
nirnira
Well said. But that's the conflict of America - lip-service to freedom on the
one hand, extreme moral conservatism and idiotic public policy on the other.

------
late_groomer
The key question posed by the author is presented as an either/or scenario, it
omits a (IMO most likely) third possibility. Alcohol consumption stays the
same, as does pot consumption, the only large effect is the revenue stream
from pot sales shifts from illegal growers/cartels, to taxable entities. This
is not a new drug, it's always been fairly easily attainable.

------
serge2k
How much is it going to save in legal expenses to charge people for
posessing/distributing pot?

------
andyl
Pot, gambling, junk TV, junk food, social media.

Escapism and distraction.

------
egypturnash
The article notes that it's possible pot purchases may cut into beer
purchases. To a certain extent I think that may happen, but I'm pretty sure
there are a lot of people like myself, who smoke a LOT more marijuana than
they drink alcohol. I suspect there's a lot more revenue to come from
legalizing than there is to lose from people choosing weed over beer.

------
jsmcgd
It will be interesting to see statistics on law enforcement expenditure in
Colorado.

------
chimeracoder
It'll be interesting to see how this windfall tax revenue is actually spent.

Under Amendment 64, the Colorado state constitution requires that the first
$40MM of revenue each year be allocated towards public schools[0]. To my
knowledge, the rest of the tax money has not yet been earmarked, so it's
currently up for grabs.

[0]
[https://en.wikipedia.org/wiki/Colorado_Amendment_64](https://en.wikipedia.org/wiki/Colorado_Amendment_64).

~~~
patio11
Since money is fungible (a dollar is a dollar no matter from which hand it
comes from or pocket it goes into), it doesn't matter. They'll simply have a
bit of handwringing the next time the budget gets tight, then offset the
education spending by the amount it is increased by the pot tax.

This happens with remarkable consistency across the US on earmarked taxes,
generally sin taxes or lottery receipts. [+] It also happens in a variety of
other contexts -- donating $1,000,000 to your university as cash or with the
proviso "must be used ONLY for undergraduate scholarships" has the same effect
either way.

[+] Edit to add: I wildly underestimated how many taxes were actually
earmarked. See: [http://mercatus.org/publication/effects-dedicating-tax-
reven...](http://mercatus.org/publication/effects-dedicating-tax-revenues)

~~~
chimeracoder
> Since money is fungible (a dollar is a dollar no matter from which hand it
> comes from or pocket it goes into), it doesn't matter.

It does matter, not because those recipients will necessarily receive more
money as a result, but because they will become beneficiaries of Amendment 64
and the (legal) marijuana trade.

In the case of the schools, this was intentional - in ten years, if someone
wants to repeal Amendment 64, they either (1) have to come up with $40MM
elsewhere in the budget, or (2) have to face criticism that they are "cutting
the public school budget"[0].

The intent of the tax (alongside the stipulation that it be spent on
education) was not to raise money for schools; it was to make opposition to
the measure less palatable.

[0] Don't underestimate the power of PTAs - in fact, it's the PTAs in rich
areas that originally lobbied in the late 1970s to repeal _just one part_ of
the Rockefeller drug laws in New York (possession of marijuana under 27
grams). Their children were being convicted of minor possession, and due to
the mandatory minimum sentences, judges were powerless to do anything but
sentence them to prison.

Of course, these same rich parents did not view (e.g.) the crack cocaine vs.
power cocaine sentencing disparity as a problem, so those laws remained in
effect.

------
chc
I have to imagine these revenues are inflated by the lack of competition. It
will be interesting to see how revenues go when pot tourism isn't a thing
anymore.

------
tareqak
The portion of the tax going to public education should have been $40 million
plus a flat 5% of revenue to really scale if it's really that lucrative.

------
hayksaakian
I wonder how its doing in WA state.

~~~
adventured
If I recall correctly, the implementation in Washington isn't nearly as far
along as in Colorado.

~~~
hayksaakian
It sure feels like it.

------
nirnira
I can't believe America sometime. Americans are supposed to cherish freedom.
Yet they cravenly surrender and prostitute their freedoms at the slightest
sign of moral outrage and censure from their fellow citizens. What free-minded
person would support 25% taxation on a product which, if used correctly, has
no negative effect on anyone other than that person (i.e. incurs no negative
externalities) - and therefore no conceivable justification for taxation?

~~~
Fomite
Two thoughts:

1\. Your objection applies to all sales tax. 2\. Why do I think you would be
equally outraged for staggeringly high laws on pollution-generating industries
or firearms, which do have negative effects on other people.

~~~
nirnira
1\. That might be true. I haven't thought about that in any detail.

2\. I don't know why either, because I wouldn't.

------
just2n
I wonder if there is any (increased) consideration for stronger laws against
smoking in public areas. Particularly on high traffic sidewalks.

Cigarette smoke is bad enough (and should also be banned in such areas), but
Marijuana smoke is far more pungent. It's bad enough we have to deal with
exhaust from cars that are clearly illegal (emissions wise), why is it OK to
spray toxic fumes all over a sidewalk with a smell that is aptly described as
a public nuisance?

~~~
catshirt
are you seriously proposing making something illegal because you don't like
how it smells?

~~~
just2n
That's clearly what I have proposed. Let's ignore the decades of research that
clearly indicates that smoke produced from burning any form of cigarette is
carcinogenic and triggers allergy symptoms and complications caused by chronic
illnesses like Athsma in others.

It takes a certain level of inconsideration to sit there and cause other
people to breathe smoke. How much would it impact someone, say yourself, to
kill someone by inducing an Athsma attack on your lunch break?

Further, it's already the case that laws exist to make certain behaviors
illegal for the very reason that they inconvenience other people, not because
they cause harm. That includes being excessively noisy and producing foul
odors in some cases, among many other things.

What I've learned today is that there are a lot of inconsiderate assholes on
Hacker News. Be it out of general apathy of others or just sheer stupidity.
I'd have argued the latter could not have been the case many months ago, but
given the recent discussions and new posters, it seems to be a contender.
Perhaps then, it is vogue to "care about others" when it's convenient (for
instance, when it makes you look good or benefits you), but otherwise fuck
other people, because "what I want to do is more important than your entire
life".

And here I thought this wasn't /., reddit, or 4chan. Wrong.

~~~
catshirt
as an allergy susceptible smoking asthmatic, i'm going to go out on a limb and
guess pollen (or dust, or mold, or...) is a bigger trigger for allergies and
asthma than second hand smoke. but i welcome any sources that support your
claim.

when i was 12 i was sledding in a park and an overwhelming smell of cigar
smoke came over me. i found the guy and asked him to stop smoking because it
bothered me, he said "get out of here kid". when i was 12, it felt unjust.
today, i consider myself audacious and inconsiderate for even asking.

>> _And here I thought this wasn 't /., reddit, or 4chan. Wrong._

likewise

~~~
Crito
Yeah, if we were banning things because of allergies, lets go after the oak
trees first. Those things are absolute menaces:
[http://www.joelgarver.com/imgs/pollen.jpg](http://www.joelgarver.com/imgs/pollen.jpg)

