Colorado’s marijuana industry is expected generate $1.5 billion in state tax revenue over the next several years, with nearly $500 million of that going to school funding and construction, according to a new forecast from the Governor’s Office of State Planning and Budgeting.
From 2019 through 2023, marijuana sales and excise taxes should average something around $377.2 million a year, the report notes, with annual tax revenue projected to cross $400 within the next three years. This despite the fact that Colorado’s overall economic activity “remains below normal levels,” according to the budget report.
However, the forecast predicts slower growth in pot sales going forward, despite a much stronger performance by dispensaries than the state Planning and Budgeting office anticipated in May.
Colorado marijuana sales have boomed through the summer even in the face of a declining economy and dropping tourism, according to the state Department of Revenue; in July, dispensaries crossed $200 million in sales for the first time since recreational marijuana stores opened in 2014. That surge led to a 32.4 percent increase in fiscal pot tax revenue from 2019 to 2020, but the new state budget forecast doesn’t see that climb continuing at such a pace in 2020, with pot revenue predicted to grow just 8 percent overall.
Colorado’s Marijuana Tax Cash Fund, which is earmarked for law enforcement, health-care, health education and substance abuse prevention and treatment programs, will receive the largest chunk of marijuana tax revenue from 2019 through June 2023: $763 million, according to the budget forecast, averaging out to $190.78 million per year.
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The state’s Building Excellent Schools Today Capitol Construction fund, which provides construction funding and technical assistance for public school districts and charter schools, is projected to receive around $312 million in marijuana tax revenue through June 2023, averaging about $78 per million. Colorado’s public school fund is pegged to receive about $42.25 per year in the same span, with local municipalities expected to get $27.55 million per year via a local share fund, and the general fund gaining $38.63 million on average, as well.
State marijuana tax revenue is generated by 15 percent sales and excises taxes on the recreational marijuana industry, as well as a standard 2.9 percent sales tax on recreational and medical sales. This doesn’t count local marijuana taxes, which are administered and collected at the county and municipal level.
One thing the state budget forecast didn’t mention: At least three Colorado towns in the metro area — Broomfield, Lakewood and Littleton — will vote in November on whether to allow recreational dispensaries within their respective communities. With a combined population of nearly 275,000 between the three towns, the outcome of those votes could affect the state’s projections.