Editor’s note: This is the first in a two-part report by Complete Colorado looking at the state’s marijuana tax collections. This first part looks at the state collections and where the money goes. Part two will look at local communities where marijuana is sold, including one Northern Colorado town — despite being just eight blocks in size — that receives the seventh-highest distribution of the “special tax” collections imposed on retail marijuana sales.
DENVER — Revenue collected through taxes imposed on marijuana sales in Colorado for the last fiscal year exceeded the collection of revenue for alcohol, tobacco, and gambling combined.
According to a report released earlier this month by Legislative Council Staff, a nonpartisan research service for the Colorado Legislature, marijuana tax revenue in Fiscal Year 2018-19 ($262,934,357) is the eighth-largest pot of money the state collects. Since recreational use began in 2014, Colorado has collected more than $1 billion in total revenue.
Colorado’s fiscal year for budgeting purposes runs from July 1 of one year to June 30 of the next. Marijuana revenue from 2018-19 was only narrowly behind severance taxes ($281,555,302) and motor vehicle registrations ($280,349,502). It amounts to 1.7 percent of Colorado’s total tax revenue. By comparison, taxes on gambling brought in $106,172,805, tobacco products were $54,849,043 and alcohol tax was $49,324,554.
The report also averaged the amount generated per user for three categories in FY 2018-19, the year the data was available for:
- Alcohol — 2,722,000 users, $18.12 annual tax cost per user.
- Tobacco — 917,000 users, $211.83 annual tax cost per user.
- Marijuana — 725,000 users, $362.67 annual tax cost per user.
The memorandum released Dec. 6 was in response to common questions raised frequently about where the tax revenue goes. The way the money is distributed and the funds it is channeled into have changed over the years, but currently, it is distributed into three-state cash funds, the General Fund and to local governments that allow the sale of retail marijuana. K-12 schools received the most, nearly 40 percent of the overall collections or $102.2 million for funding of construction projects supported through the Building Excellent Schools Today (BEST) grant program.
BEST was developed in 2008. It provides matching funds at varying levels to public schools for construction projects to improve the health and safety of students in buildings needing repair. The money has been used for new roofs, boilers and other major renovations, as well as completely new schools.
Marijuana is subject to three distinct taxes, two voter-approved taxes — a 15 percent “excise” tax, and a 15 percent “special” sales tax— and the state’s regular 2.9 percent sales tax. They are applied differently to medical and recreational use. Medical marijuana is subject only to the state’s sales tax and counts toward the state’s Taxpayer Bill of Rights (TABOR) spending limits. Recreational marijuana is not subject to the sales tax but is subject to the excise and special use taxes, which do not count against TABOR, as they were voter-approved.
WHERE DOES THE STATE-RETAINED PORTION GO?
- Sales tax revenue (state keeps 100 percent) is collected on medical marijuana sales and merchandise or other non-marijuana products sold in recreational stores. It goes into the “Marijuana Tax Cash Fund.”
- Special sales tax (state keeps 90 percent) on retail marijuana. It goes into the General Fund, and is distributed:
- 15.56 percent is retained in the General Fund.
- 12.59 percent is sent to the State Public School Fund.
- 71.85 percent is sent to the Marijuana Tax Cash Fund.
- Excise tax (state keeps 100 percent) and beginning in Fiscal Year 2019-20, all the money is planned to go to the BEST fund. However, only the first $40 million in collections of excise tax each year is constitutionally mandated. Any additional tax collected could be redirected by future legislatures.
- The Marijuana Tax Cash Fund (these appropriations from this fund are made annually by the legislature through the budget. The following figures are 2019-20 appropriations).
- Agriculture ($1.9 million).
- Education ($21.4 million).
- Governor’s office ($1.2 million).
- Health care policy and financing ($1.5 million).
- Higher Education ($1.8 million).
- Human Services ($44.3 million).
- Judicial ($1.6 million).
- Law ($1.2 million).
- Local Affairs ($21.4 million).
- Public Health and Environment ($24.3 million).
- Public Safety ($6.4 million).
- Transportation ($2 million).
- The Marijuana Tax Cash Fund (the appropriations from this fund are made by the legislature in separate pieces of legislation. For brevity, the bill numbers are linked to their full descriptions on the General Assembly’s Website).
- SB 19-001 (Higher Education) $2.5 million.
- SB 19-008 (Public Health and Environment) $1.8 million.
- SB 19-010 (Education) $3 million.
- SB 19-176 (Education) $1.5 million.
- SB 19-228 (Higher Education, Human Services and Public Health and Environment) $4.292 million.
- SB 19-246 (Education) $1.1 million.
- HB 19-1009 (Local Affairs) $826,000.
- HB 19-1017 (Education) $43,000.
- HB 19-1073 (Public Safety) $500,000.
- HB 19-1203 (Public Health and Environment) $3 million.
- HB 19-1223 (Human Services) $1.4 million.
- HB 19-1287 (Human Services) $5.6 million.
- The Marijuana Tax Cash Fund (the appropriations from this fund are required by statute).
- General Fund (15.56 percent of special sales tax collected remains here).
- This fund is used for most general government functions.
- State Public School Fund (12.59 percent of special sales tax collected).
- This fund is used to pay the state’s share of school funding and other educational purposes.