In the year 2012, voters in the state of Colorado legalized adult-use cannabis and approved Amendment 64, which made it the first state in the country to have a legal recreational cannabis market.
Since then, Colorado has made more than $10 billion in total cannabis sales. In 2020, while other industries suffered at the hands of the coronavirus pandemic, cannabis sales increased significantly in the state.
In January this year, cannabis sales topped $180 million, which set a new record. In the last six years, the state has collected more than $1.5 billion in fee revenues and cannabis taxes. This revenue stream was a key selling point for voters in the state when the legalization measure was being passed in 2012. Many are curious to know how these monies have been allocated.
According to Amendment 64, the state is obligated to collect a 15% special sales tax when marijuana changes possession from cultivator to seller and a 2.9% sales tax from both recreational and medical sales. The 2.9% tax on medical cannabis is directed to the Marijuana Tax Cash Fund.
The amendment also has a clause that states that 90%, or the first $40 million, accumulated is to be allocated to a capital construction grant program, where different education providers, districts and schools can apply for funds to renovate existing facilities or construct new buildings.
On the other hand, the 15% excise tax is directed to the general fund of the state of Colorado, with a portion being allocated to the State Public School Fund, which is managed by the Department of Education. The remaining amount is allocated to the Marijuana Tax Cash Fund.
Since legal retail sales began in 2012, more than 15% of the budget of the Marijuana Tax Cash Fund has been directed to education initiatives. However, while cannabis tax dollars help fund construction and school maintenance, they don’t address per pupil funding, with very little of these taxes being directed to school operating budgets for school supplies, books and teacher salaries.
In addition, different jurisdictions in the state allocate cannabis tax revenues differently. For instance, in the period between 2014-2019, Denver allocated more than $15 million to youth prevention with more than $25 million in tax dollars also going to cannabis enforcement and regulation. Additionally, $19 million, over $3 million and more than $15 million was allocated to city capital improvements, opioid intervention and affordable housing respectively.
Legislators in the state are being pushed to change how tax revenue is used annually and introduce legislations to establish new programs.
While a lot of attention may be directed towards the tax benefits of the cannabis sector, it is also worthwhile to be cognizant of the work done by companies such as RYAH Group Inc. (CSE: RYAH), which is developing cutting-edge IoT dose-measuring devices with the potential to take plant medicine (medical cannabis, for example) to a whole new level of precision.
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CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
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