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Where Does Colorado Cannabis Tax Money Go?

Colorado Cannabis & The Federal Tax Code

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Colorado state tax revenue from the legal cannabis industry surpassed $2 billion in January and the state has collected more than $88.7 million in fees.

In addition to state and local taxes and fees, cannabis businesses have an effective federal tax rate of about 70% – compared to about 26% for other businesses. 

Did you know Colorado legal cannabis dispensary owners are unable to deduct normal business expenses like payroll and rent from their federal income taxes?

Marijuana has contributed over $320 Million dollars to Building Excellent Schools Today (B.E.S.T.), making up about 25% of the program's entire budget.

In FY 21-22 alone, nearly $15.3 million in state cannabis dollars went to state Affordable Housing Grant and Loans.

The Marijuana Tax Cash Fund collected $188.8 Million in FY 2021-22 alone.

In FY 21-22 alone, nearly $15 million in cannabis dollars went to the School Health Professional Grant program. 

More than $15 million in cannabis dollars went to substance abuse treatment in FY 21-22.

More than $1.6 million cannabis dollars went to the Tony Grampsas Youth Services Program in FY 21-22.

Voters in 59 of 64 Colorado counties voted no on Proposition 119 sending a clear message against raising taxes on cannabis consumers.

Unlike other legalized substances, the marijuana industry has a 97% compliance rate for unauthorized sales.

Unlike alcohol, research has proven you can only get “so high.” Cannabinoid receptors in your brain eventually prevent the body from getting further intoxicated.

Did you know? Since legalization in 2005, teen use in Colorado has remained flat and is below the national average.

According to a recent poll by the Pew Research Center, more than 90% of Americans think cannabis use should be legal.

Did you know? MIG represents more than 400 cannabis business licenses across the state.

A 2021 study found that medical cannabis use was associated with clinical improvements in pain, function, and quality of life with reductions in prescription drug use. 

Founded in 2010, MIG is the oldest and largest trade association for licensed cannabis businesses.

Colorado’s marijuana model has become the example for all other regulated cannabis states, and MIG works directly with policy makers to ensure that Colorado’s program is fair, tightly regulated, safe, and successful.

Safe Sales: Every marijuana sale in CO takes place on camera and requires multiple ID checks.

All regulated marijuana in Colorado is tracked from “seed to sale,” with oversight from the Marijuana Enforcement Division.

Established in 2010, MIG has led legislation for child resistant packaging, customer safety resources, and purchase restrictions for 18-20 year olds.

Marijuana is taxed at both state and local levels. This year Aurora built a new $34 Million dollar rec center, fully funded by local marijuana taxes.

The marijuana industry suffers from unfair Federal tax rules, which means that MIG members’ effective tax rates are around 71%.

A 2019 study showed that crime does not increase with legalization.

Conditions for medical marijuana

Cancer - Glaucoma - HIV or AIDS - Cachexia - Persistent muscle spasms - Seizures - Severe nausea - Any condition for which a physician could prescribe an opioid - Autism Spectrum Disorder - Severe pain - PTSD

Most marijuana businesses have access to banks, but because marijuana is still federally illegal, businesses are unable to access merchant processing services such as VISA or Mastercard.

Consuming higher potency marijuana does not lead to higher levels of impairment.
-- Journal of the American Medical Association (JAMA) 2020

71% of Colorado voters favor marijuana legalization. This has increased 10 points in the last four years alone.

Industry Group Encourages Marijuana Enforcement Division to Take Full Steps to Enforce Cannabis Law

MIG Press Release

DATE: 04.18.24
CONTACT: Truman Bradley

Industry Group Encourages Marijuana Enforcement Division to Take Full Steps to Enforce Cannabis Law

Recently Released DOR Numbers Put Into Perspective a Desperate Need to Re-evaluate Colorado’s Purchase Limits on Recreational Marijuana

DENVER – The Marijuana Industry Group

On Friday April 12th, the Marijuana Enforcement Division (MED) released a Notice informing the industry of “multiple allegations” of licensees illegally bringing hemp derived THC distillate into the regulated market. While there are few details due to this being an ongoing investigation, the Marijuana Industry Group (MIG) commends the MED for taking swift action to protect public safety and preserve the integrity of the regulated marijuana industry.

Truman Bradley, Executive Director of MIG, had this to say, “MIG members are delighted to hear the news. Regulation doesn’t guarantee the absence of bad actors; it does however, provide a means to catch the small percentage of businesses breaking the law. This protects both consumers as well as businesses who play by the rules. Investigations like this prove that a regulated model works.

Loss of Tax Revenue:
This illegal activity also hurts state tax collection and the schools and programs that rely on marijuana tax dollars. Bringing distillate into the market means that the bad actors deliberately circumvent paying the 15% marijuana excise tax. In FY 2021 - 2022 the state collected $120M in excise tax + $288M in marijuana sales tax. For revenue year 2023, the state collected $52.2M in excise tax + $220M in sales tax, a loss of $135M in one year.

Industry Harm:

It’s no secret that the Colorado cannabis industry has fallen on hard times. Any subversion of the legal market punishes all of the small businesses who pay their taxes and meticulously follow the rules. There are certainly other factors that have contributed to the downturn, but at least some of the collapse of the wholesale market may have been caused by bad actors essentially laundering THC.” – Tiffany Goldman, Board Chair, Marijuana Industry Group

Distillate is the refined oil made from marijuana and/or hemp plants. The vast majority of cannabis edibles, vapes, tinctures, and topicals are made from distillate. Unlike oil distilled naturally from marijuana plants, chemists working outside the regulated marijuana market have developed a way to chemically convert hemp derived CBD distillate into THC distillate. That process is potentially harmful to consumers and is illegal to sell in Colorado.

As Colorado was the first state to regulate cannabis, some of the rules and enforcement areas need a fresh look. This is a great example of the enforcement areas that a regulatory body should be focusing on, especially in mature states. While the MED may have been created to prevent diversion from the regulated industry to other (non-legal) states, it’s equally important to make sure that no cannabis comes into the regulated market from illicit sources, especially products that can harm consumers.


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