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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.

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MySpark Denver Campaign is the Wrong Measure at the Worst Time

 

Denver voters will be asked this November to vote on the My Spark Denver ballot measure which would raise taxes on marijuana by 50%. This is nearly identical to Proposition 119, which lost statewide and in 59 of 64 counties, including Denver itself. It’s important to understand, this measure does not provide funding for our schools. In fact, the measure claims the funding will be used for after school programming run by outside groups, but it’s unclear how these programs will be implemented, how much they will cost, and if there will be sufficient oversight to ensure our taxpayer dollars are well spent. The measure also pulls from existing tax revenue used for critical programs like providing affordable housing and ending homelessness.


The MySpark measure would have devastating impacts on sales within Denver and hit already struggling small business owners hard. This is also a major cost increase for consumers and patients at a time when inflation is already causing financial stress for many Denverites and gas, food, and housing costs are sky high. A tax this high will push consumers to other municipalities and even back to the black market.  As Denver represents the largest percentage of the total cannabis sales for the state, anything that would negatively impact Denver sales will also directly hurt statewide tax revenue. 


This measure has made the ballot, and we will be working hard against this cash grab to protect Colorado small business owners, consumers, patients and existing affordable housing and homelessness relief programs. This is the wrong measure and the worst time, and we will encourage a no vote.

 

 

Read more about the challenges facing Colorado’s Cannabis Industry:

 

Declining Marijuana Sales Spells Trouble for State and Local Revenue

 

The marijuana sales figures released by the Colorado Department of Revenue continue to show a sharp decrease in medical and recreational marijuana sales statewide. This sales drop-off is causing a sharp decrease in the revenue collected by state and local governments, endangering funding for many important public programs. Consistent increases in taxes and burdensome regulations continue to hurt the industry and decrease revenue for critical programs. 

 

The state recorded $146.4 million in total sales for recreational and medical marijuana in June, down from $187.3 million in June of 2021, a 22% decrease. Medical sales saw a particularly sharp drop, with just $19.2 million in sales for June compared to $34.5 million in 2021, a 44% drop. Recreational sales were down 17% percent year over year, from $152.7 million last June to $127.2 million in June of this year. 

 

This drop in sales has delivered a major blow to a critical revenue stream that funds key public programs in Colorado. In 2021, the state had collected $252 million in tax revenue by the end of July. This year, the state has collected only $198.3 million, a $53.7 million or 21% decrease from last year. 

 

With over 43,000 people directly employed by Colorado cannabis businesses, the marijuana industry is both a critical job provider and source of revenue for the state.  Thousands of jobs are at risk as sales continue to decline. We need to protect this critical Colorado industry so that small businesses can stay open, continue to provide good paying jobs, and generate critical tax revenue for our state many years to come. This means no more tax increases to fund pet projects and no additional regulations that don’t provide tangible health or safety benefits. The future of the country’s first legal cannabis industry will depend on the policies that lawmakers put in place over the next few years.

 

Want to learn more about where cannabis tax dollars are going and where they come from? Check out our new State Marijuana Tax Dollars sheet

 

Healthy Kids Colorado Survey Shows Significant Decrease in Teen Cannabis Use, Perceived Access, and Driving while High

 

MIG was pleased to see the results of the state’s Healthy Kids Colorado Survey which showed that teen marijuana use is down by 35% since the last survey two years ago. This year’s survey found:

  • Far fewer teens are using marijuana. In the survey, 13.3% of youth used cannabis in the past month, a decrease from 20.6% in 2019, representing a 35% decrease in teen use.
  • It is getting harder for teens to get their hands on marijuana. In the survey, 40.3% of youth feel it would be easy to get cannabis, a decrease from 51.4% in 2019
  • Teens have a better understanding of the risks of regular marijuana use. In the survey, 60.4% of youth think marijuana use is risky, up from 50.1% in 2019
  • Half as many teens drove high. In the survey, 5.5% of teens reported driving after using marijuana, down from 11.2% in 2019. 

Preventing youth access and keeping communities safe has always been a top priority for the industry, and we think this survey indicates our efforts are working. In fact, Colorado has a 95-97% compliance rating when it comes to preventing underage marijuana consumption. Unfortunately, however in the 2022 legislative session, cannabis prohibitionist groups stripped more than $2 million in funding from programs run by the Colorado Department of Public Health and Environment (CDPHE) that provided education on cannabis use for teens and other groups as well as educating the public around the risks of driving while high. 

 

It’s unclear what the long-term effects will be of cutting this funding, but we are committed to continuing to work with regulators, lawmakers and community groups to increase education around cannabis and prevent youth access. You can view the survey here.

 
 

Montbello 20/20, MIG and The Health Center Donate 2,500 Backpacks for Kids

This August, The Health Center and MIG partnered with Montbello 20/20 to Donate 2,500 backpacks for kids in Montbello. This annual event provides critical resources to struggling low income kids and families, and is a great event for the community. You can learn more about Montbello 20/20 and the important work they do here.

 

Hemp-Derived Intoxicants Task Force Holds First Meeting


Hemp has gotten plenty of headlines as a renewable, inexpensive product that has a variety of invaluable uses. In fact, it was legalized in the 2018 Farm Bill. What many people are unaware of, however, is that while harmless in its natural state, Hemp can be concentrated into an intoxicant and many manufacturers are now selling these hemp-derived intoxicants online. These sales are completely unregulated, meaning teens are able to log on and order hemp-derived THC to their doorstep. No ID required, no testing of product safety, and no purchase limits.


According to the FDA there have already been more than 100 reports of adverse health effects due to hemp related intoxicants. Many states have already created laws to reign this industry in, however, Colorado is not one of them.  

 

Lawmakers did take steps this year by passing Senate Bill 205, which requires the Marijuana Enforcement Division to convene a task force to evaluate current policies and loopholes and make safety recommendations for legislation next year. The task force is made up of leaders in both the legal marijuana and hemp industries, patients, lawmakers and other experts and had their first meeting in July.


As a highly regulated industry that is committed to the health and safety of our communities, we are hopeful this task force takes their charge seriously. Keeping toxic products out of the hands of kids should be a number one priority for everyone – period.

 
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