New report shows Colorado cannabis tax revenue exceeds tobacco and alcohol revenue

The Colorado Legislative Council Staff (LCS), dubbed the “bipartisan research arm of the Colorado General Assembly,” released a report on Aug. 16 detailing how cannabis taxes benefit the state.

According to the analysis, Colorado’s annual cannabis tax revenue may have declined in fiscal 2021-2022 and fiscal 2022-2023, but cannabis sales remain a steady stream of cash into the Colorado household — more than any other regulated substance.

Data shows Colorado generated $282.3 million in cannabis tax revenue in fiscal year 2022-2023, compared to $233.9 million from cigarettes, $60.5 million from tobacco products, $56.4 million from nicotine products and $56.1 million from alcohol.

Cannabis tax revenue comes from a 15% excise tax, a 15% special sales tax, and a 2.9% general sales tax. Excise tax and special sales tax apply to purchases of recreational cannabis, but only state sales tax applies to sales of medicinal cannabis.

In a breakdown of where cannabis tax revenue is distributed, the 2.9% sales tax on medical cannabis goes directly to the Marijuana Tax Cash Fund, while the special sales tax of 15% on sales of adult-use cannabis goes to the Marijuana Tax Cash Fund and the State Public School Fund is divided and local governments. Adult consumption tax goes directly to the BEST fund (Building Excellent Schools Today).

A portion of the state’s cannabis tax revenue goes to a variety of programs such as substance use disorder services ($16.6 million), affordable housing grants and loans ($15.3 million), a school health and professional grant program ($15 million) and Mental Health Services ($6.1 million), Black Market Cannabis Ban/State Toxicology Laboratory ($4.4 million), Pesticide Control and Regulation ($1.2 million) dollars), Marijuana Driving Disorder Campaign ($1.1 million), and School Bullying Prevention and Education ($1 million).

“Taking into account statutory distributions and MCTF [Marijuana Tax Revenue and Education] “K-12 education received approximately 37 percent of the total expenditure from marijuana revenue for school funding and school construction, due to its funds,” the analysis reads. “The Department of Human Services received about 20% for a variety of programs, including those focused on behavioral health and addiction.”

The distribution of cannabis tax revenue was split between the Department of Human Services ($57.5 million), School Construction ($55.9 million), School Funding ($52.4 million), the General Fund (US$30.7 million) and Department of Public Health and Environment (US$23.6 million). , Local Government ($21.9 million), Department of Local Affairs ($17.5 million), Department of Higher Education ($11 million), Department of Public Safety ($7.6 million) and “Other” ($14.1 million), which includes a number of smaller divisions.

While FY 2020-2021 posted a record high of $425 million, FY 2021-2022 declined slightly to $366 million, followed by FY 2022-2023 at $282 million.

A report released in September 2022 by the Tax Policy Center found that cannabis sales in Colorado and Washington generated more tax revenue than alcohol or cigarettes in fiscal year 2022.

Similar reports, such as a report released by the Arizona Dispensaries Association in March 2022, showed that tax revenue from cannabis reached $6.3 million, which is more than the tobacco combination ($1.7 million) and Alcohol ($2.7 million) that month.

The California Governor’s Office of Business and Economic Development (GO-Biz) allocates cannabis tax dollars to a variety of accredited organizations. The most recent annual awards included more than $50 million from fiscal year 2022-2023, divided among 31 organizations ranging from government agencies to youth organizations. In FY2020-2021, GO-Biz distributed $29.1 million among 16 award recipients, and in FY2021-2022, GO-Biz awarded $30 million to 58 select recipients. The state recently opened a new grant application window between August 14 and September 14. 18, select organizations to be announced sometime in Spring 2024.

A May report by Whitney Economics showed that the legal cannabis industry paid more than $1.8 billion in taxes in 2022. However, Whitney Economics’ chief economist explained that these taxes, which are putting many cannabis business owners at odds, are on the “brink of systemic collapse.”