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Is Big Government About To Make Big Green On Marijuana?

By Todd Campbell - May 27, 2016 at 8:41AM

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Colorado's marijuana tax revenue could soon be dwarfed by California's haul if voters pass recreational marijuana in November.

Marijuana is going mainstream and that means that marijuana taxes are increasingly fattening state government's coffers.

In Colorado, where recreational marijuana cut its teeth in 2014, marijuana sales are already eclipsing an annualized $1 billion pace, and that's translating into a nine-figure payday for Colorado's Department of Revenue. In April, Colorado collected $13 million in cannabis taxes and fees.

April's take puts the state on pace to collect $156 million in cannabis taxes and fees over the next 12 months, but Colorado's total haul from marijuana next fiscal year (which begins July 1) is likely to be a lot more than that. Why? Because marijuana sales continue to grow. In the current fiscal year, Colorado has collected $125 million in marijuana taxes and fees, up 55% from the same time last year.

Colorado's success bodes well for other states considering recreational marijuana laws this fall. Voters in the Golden State will take up the issue of recreational marijuana in November; if the measure is OK'd, then taxes and fees generated by cannabis in California could dwarf Colorado's figures.

Image source: Flickr user milkwhitegown.

California's state government reported in December that annual marijuana taxes and fees associated with recreational marijuana could total in the "hundreds of millions of dollars" and that they could potentially be as high as $1 billion.

That tax revenue would come largely from a 15% sales tax on marijuana, but it would also come from marijuana cultivation taxes of $9.25 per ounce for dried marijuana flowers, and $2.75 per ounce for dried marijuana leaves.

California could also see an uptick in state income tax revenue as black-market marijuana producers and sellers come out of the shadows.

The state's ramp in marijuana tax revenue could be faster than Colorado's, too.

California pioneered medical marijuana laws in the 1990s, so there are nearly 1,000 medical marijuana dispensaries already open for business. Applications for recreational marijuana licenses by medical marijuana dispensaries in California will get preference, so many of these shops could begin serving customers quickly.

The state shouldn't have difficulty getting enough supply to meet demand, either. California's marijuana culture is well established and California is by far the biggest indoor and outdoor producer of marijuana in the country. California grows four times more marijuana every year than Tennessee, the second highest-producing state.

Most of that marijuana is grown in a thinly populated area in the northern part of the state called the Emerald Triangle. The Emerald Triangle is thought to be the largest marijuana-producing area in both the U.S. and the world.

Legalizing cannabis could also have a big and positive impact on California tourism.

A Google search of Colorado marijuana tours yields 435,000 results, and in December, the Denver Post reported that Colorado's my420tours handles between 120 and 200 tourists per week. A survey conducted last year by Denver's Department of Tourism found that 22% of Colorado tourists said marijuana was "extremely influential" in planning their trips to visit the state.

California's Napa Valley hosts more than 3 million wine lovers every year, and those visitors spend more than $1.6 billion annually in the region. Could tourism in the Emerald Triangle eclipse those figures? Only time will tell. But if it does, then marijuana's impact on California's coffers may extend far beyond the marijuana taxes and fees the state collects.


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