The Department of Revenue is releasing tax and fee revenue collected on medical and retail marijuana for January 2014. Revenue includes 15% excise tax, retail 10% special sales tax, retail 2.9% sale tax, medical 2.9% sales tax, and retail and medical marijuana application and license fees.
“The first month of sales for recreational marijuana fell in line with expectations,” said Barbara Brohl, Executive Director of the Department of Revenue. “We expect clear revenue patterns will emerge by April and plan to incorporate this data into future forecasts.”
Tax and fee revenue collections in the first few months of 2014 will be significantly affected in both directions by a number of variables, including but not limited to: the speed of local approval processes; the availability of supply; and a possible increase in initial demand.
A summary of the revenue projections and actual collections can be found in the table below.
|January 2014 Actual|
|Retail 15% Excise Tax||$ 195,318|
|Retail 10% Special Sales Tax||$ 1,401,568|
|Medical 2.9% Sales Tax||$ 913,519|
|Retail 2.9% Sales Tax||$ 416,690|
|TOTAL TAX REVENUE||$ 2,927,095|
|Retail Marijuana Fees||$ 96,300|
|Medical Marijuana Fees||$ 496,361|
|TOTAL FEE REVENUE||$ 592,661|
|TOTAL REVENUE||$ 3,519,756|
Highlights of this information include the following:
- By the end of January, 59 businesses had filed a return.
- In the initial projections, the number of businesses approved to be operating at the start of January was projected to total 40 businesses; however only 24 businesses were approved to operate on January 1. The number of retail marijuana businesses approved to operate was approximately 3% of the total medical marijuana businesses operating at that time.
Attached are the three documents that will be posted today on the Department of Revenue’s web site. These same documents will be posted between the 10th and 15th of each month.
As one of the largest producers of marijuana-infused edibles in Colorado, Dr. J’s Hash Infusion makes chocolates, caramels and candies. But many of the company’s products contain only a minute fraction of the THC promised on Dr. J’s labels, according to independent tests organized by The Denver Post.
One Dr. J’s milk chocolate Star Barz labeled for 100 milligrams of THC had 0.37 milligrams of the valued psychoactive component, according to three tests conducted by Steep Hill Halent of Colorado, a state-licensed marijuana testing facility. Another popular Dr. J’s chocolate bar, the 100-milligram Winter Mint flavor, tested similarly in two experiments, showing 0.28 milligrams of THC.
“They need to work on their process,” said Joseph Evans, laboratory director at Steep Hill Halent. “I don’t know that it’s irresponsible, but it’s nonprofessional.”
Chart: See the results of The Denver Post’s tests on various marijuana edibles.
The evolving marijuana industry is still finding its way in Colorado, and one of the evolving aspects is the testing — or lack thereof — of products. The state’s Marijuana Enforcement Division enacted new regulations last week, and more changes are to come in May, July and October.
Across America, lawmakers are eyeing tax revenue from legalized marijuana. Colorado and Washington are each officially expecting over $100 million annually in marijuana excise taxes. In a few days, the Colorado Department of Revenue is due to report how much marijuana tax was paid there for January, the first full month of recreational sales anywhere ever.
But the report on January collections will tell us next to nothing about what other states can expect, and only a little about Colorado. You can multiply January taxes by 12, but that won’t show annual marijuana revenue the state can count on from now on — for two reasons. First, the mature market will not resemble the start-up January market. Second, Colorado will start taxing some transactions that it exempted in January.
In future months, Colorado’s industry will probably sell more grams of marijuana than it sold in January, but at lower prices. More grams will pull taxes up. Lower prices will push taxes down. It’s not clear where taxes will end up.
Some background: Colorado’s Constitution calls for two recreational marijuana taxes — a 10-percent retail tax, and a 15-percent wholesale tax. With those percentage taxes, lots of grams of pot sold at high prices mean lots of tax is collected. If the number of grams goes down, or if prices go down, less tax is collected.
The number of grams for sale in January was low. As the month began, few stores were open — but now more stores are opening all the time. Even the stores that were open experienced a “valley of supply,” as they geared up and struggled to meet demand. That low supply won’t last long, but fewer grams of marijuana were sold in January than in a normal month. Fewer grams pushed January tax collections down.
A maturing industry will not just sell more units — it will also charge lower prices. Think cell phones and large screen TVs.
Colorado’s top U.S. prosecutor urged cooperation between state and federal officials on marijuana policy during a congressional hearing Tuesday that was notable for showing the deepening divisions on the topic in Washington, D.C.
Although marijuana remains illegal federally, Colorado U.S. Attorney John Walsh said federal law enforcement officials must work with their local counterparts to achieve common goals such as keeping marijuana away from kids, even after states legalize marijuana for adult use.
“With our collective effort, and only with our collective effort, we can succeed in implementing effective marijuana regulatory efforts in practice and on the ground,” Walsh said in testimony before a subcommittee of the U.S. House’s Committee on Oversight and Government Reform.
The hearing was the subcommittee’s second under the title, “Mixed Signals: The Administration’s Stance on Marijuana.” But rather than clarifying those signals, the hearings mostly illuminated why they exist.
Much of Tuesday’s hearing consisted of lawmakers battering a top Drug Enforcement Administration official with questions about his agency’s resolute stance against marijuana — as the official, deputy administrator Thomas Harrigan, reiterated that the DEA sees “no sound scientific, economic or social reasons to change our nation’s marijuana policies.”
That clashes with what President Barack Obama said in an interview with The New Yorker magazine published earlier this year, when he said marijuana is not more dangerous than alcohol and that marijuana enforcement disproportionately punishes minorities. Of marijuana legalization in Colorado and Washington state, Obama said: “It’s important for it to go forward.”
In line with that, the Department of Justice last year issued guidance to allow state legalization of marijuana to proceed without federal interference so long as the states address eight key priorities — including preventing stoned driving, out-of-state pot smuggling and access by youths. Walsh and Harrigan both said Tuesday the guidance has not changed their approach to marijuana, which focuses on taking down large criminal organizations.
“There has been little impact on our enforcement actions,” Harrigan said.
Organizers want to make this year’s Denver 4/20 marijuana rally into a larger-than-ever festival celebrating the first legal pot sales anywhere in the world.
But Denver city officials are weighing whether they will issue a permit to use Civic Center, leaving the two-day April event in question this year.
A turning point of sorts came last week, when an attorney for the event sent an eyebrow-raising letter to city officials putting them on notice that organizers would encourage attendees to toke in the park.
The letter asks for the city’s permission for adults to consume marijuana, although attorney and activist Robert Corry also asserts that the city’s OK isn’t needed.
“We would welcome Denver’s recognition of reality,” Corry wrote, saying that the organizers, as permit-holders, could control cannabis rules during the festival.
Amendment 64, passed by Colorado voters in 2012, allows the private sale and use of recreational marijuana.
But the constitutional law still bans public consumption of pot.
Scott Martinez, Denver’s city attorney, says last week’s letter and the knowledge that organizers will encourage pot use by 4/20 attendees will factor into the permit decision.
“We’ve received it, and we’re analyzing and seeing whether it affects any of our duties as a city,” Martinez said Wednesday.
That a cloud of marijuana smoke might drift above Civic Center during the April 19-20 event — particularly at 4:20 p.m. on April 20, a holiday for pot enthusiasts — is hardly a surprise.
For years, Denver police have treaded lightly, avoiding aggressive arrests or citations during an event that draws tens of thousands. That was true last year, when an outbreak of gunfire during the haze-filled rally injured three people and sent attendees running for cover.
FILE — Attorney Robert Corry, with a marijuana cigarette dangling from his mouth, leads the crowd in the protest on the proposed Proposition AA tax on marijuana during the pot giveaway on the Pearl Street Mall in Boulder, Colorado on Monday September 23, 2013. (Paul Aiken, Daily Camera)
Handed a budget proposal that predicts sky-high marijuana tax revenue, Colorado lawmakers say they will move cautiously in deciding how much to spend.
Last week, Gov. John Hickenlooper’s budget office predicted medical and recreational marijuana sales would net Colorado nearly $134 million in tax and fee revenue in the fiscal year beginning this summer. But Rep. Crisanta Duran, the chairwoman of the legislature’s Joint Budget Committee, said lawmakers aren’t convinced of Hickenlooper’s numbers and want to wait for a different forecast next month before estimating how much money they will have to spend.
“We really need some additional details, and we will give it a thorough review,” said Duran, a Denver Democrat. “My overall concern with these totals is that it’s pretty early in the process, and we don’t know if this will be a long-term revenue source for the state.”
Another JBC member, Sen. Kent Lambert, echoed Duran’s caution, saying he would prefer to see figures for how much the state actually collected in marijuana taxes in January — the first month for recreational sales. Those figures are also expected mid-March.
“We don’t know,” said Lambert, a Colorado Springs Republican. “We need a lot more data before we could have a real estimate of what that sustained revenue will be.”
Budget committee members are deep into planning next year’s spending plan, and Lambert said that makes it especially difficult to evaluate and incorporate new marijuana tax projections on the fly.
“This is a moving target,” he said.
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But Hickenlooper’s proposal doesn’t call for the marijuana money to be put to general purpose. Instead, it directs all the available money — minus what is constitutionally required to go to school construction — into projects to counter the possible negative impacts of marijuana legalization. He has proposed putting $85 million over the next 18 months into youth marijuana-use prevention and into substance-abuse treatment.
Duran said she supports that idea.
“I think the substance-abuse dollars will be great to have an increase there,” she said.
Those priorities have led to sharply divided opinions elsewhere. Mason Tvert, one of the leaders of the marijuana legalization campaign in Colorado, blasted the proposal as funding “marijuana propaganda.” Diane Carlson, a spokeswoman for Smart Colorado, a group concerned about the effects of legalization, praised the governor’s proposal for addressing major issues in “a meaningful way.”
One county, Pueblo, has so far reported marijuana tax figures for January, when the county says the taxes brought in nearly $56,000. More numbers are expected next month, when Denver and state officials both will report January figures and the legislature’s economists give their own projection of what marijuana taxes will bring in for the state in the next fiscal year.
It’s high times for at least two pot stores in Colorado.
A southern Colorado county with a pair of recreational weed shops became the first in the state Monday to announce tax totals from its fledgling — and recently legalized — industry.
Pueblo County finance officials said Monday that its two stores generated roughly $1 million in total sales to cannabis customers in January — producing about $56,000 in local sales taxes, according to The Associated Press.
The county is the only spot between Denver and the New Mexico state line that presently permits recreational weed sales. The two stores are slated to be joined by three others launching in February, the wire service reported.
“We recognize that the eyes of the world are watching us, and we are proud to have erected a robust regulatory environment in Pueblo County,” County Commissioner Sal Pace said in a statement Tuesday.
Pueblo County Clerk Gilbert Ortiz estimated the weed industry will gin up about $670,000 in new tax revenue for the county this year, according to the AP.
Colorado Democrat John Hickenlooper has a firm answer to other U.S. governors asking him about marijuana as source of revenue: Just say no.
Hickenlooper said yesterday that about a half-dozen called or asked him at this weekend’s National Governors Association meeting in Washington about his state’s experience legalizing recreational pot. They want to know about the potential to collect money and avoid the costs of enforcement and incarceration, he said.
Colorado projected last week that sales would generate more than $100 million a year toward a general fund of about $9 billion. But Hickenlooper, who opposed legalizing marijuana, said he’s telling fellow governors that he’s not counting on it to lower other taxes or for spending — and that they shouldn’t, either.
“It’s not a panacea,” Hickenlooper, 62, said in an interview. “It’s not going to solve your revenue problems.”
The movement to bring pot out of the shadows and onto the tax rolls reflects its steady presence in U.S. life. Thirty-eight percent of Americans acknowledge having tried marijuana, compared with 33 percent in 1985, according to a Gallup poll conducted in July. With its widespread familiarity, and with prisons and jails strained by large populations of nonviolent criminals, above-board pot presents possibilities.
DENVER — For Colorado’s new flock of recreational marijuana growers and sellers, Thursday was Tax Day — their first deadline to hand over the taxes they had collected during their inaugural month of sales. And as store owners stuffed cash into lockboxes and made the nervous trek to government offices, new budget numbers predicted that those marijuana taxes could add more than $100 million a year to state coffers, far more than earlier estimates.
The figures offered one of the first glimpses into how the bustling market for recreational marijuana was beginning to reshape government bottom lines — an important question as marijuana advocates push to expand legalization beyond Colorado and Washington State into states including Arizona, Alaska and Oregon.
In Colorado, where recreational sales began on Jan. 1 with hourlong waits, a budget proposal from Gov. John W. Hickenlooper estimated that the state’s marijuana industry could reach $1 billion in sales in the next fiscal year, with recreational sales making up about $610 million of that business.
“It’s well on its way to being a billion-dollar industry,” said Michael Elliott, executive director of the Marijuana Industry Group, a Colorado trade association. “We went from 110,000 medical marijuana patients to four billion people in the world who are 21 and up.”
In the budget proposal that Mr. Hickenlooper released Wednesday, his office said the state could collect about $134 million in taxes from recreational and medical marijuana for the fiscal year beginning in July. He proposed to spend $99 million on programs including substance-abuse treatment, preventing marijuana use by children and teenagers, public health and law enforcement.
“This package represents a strong yet cautious first step toward ensuring a safe and responsible regulatory environment,” Mr. Hickenlooper wrote in the proposal.
In Washington, where retail sales of marijuana are expected to begin in June, budget forecasters estimated Wednesday that marijuana could bring the state nearly $190 million in taxes for the four years beginning in the middle of 2015. That money would go to a variety of health and substance-abuse programs, and the state’s general fund.
“Every governor and legislator in the country will be like, ‘Hey, check out these numbers,’ ” said Reuven Carlyle, a Democratic state lawmaker from Seattle who is chairman of the House Finance Committee.
For marijuana advocates, taxes were one of the major selling points of legalization. They have said that expanding the market for the federally prohibited plant could give states money for school construction, health care, substance-abuse programs and public health. Colorado’s legalization measure said $40 million in tax revenue would go toward school construction, and in November, voters across this otherwise tax-averse state overwhelmingly approved 25 percent taxes on recreational marijuana.
But opponents, and some skeptical economists, say the dreams of a windfall are far too optimistic. They worry that the higher costs of enforcement and regulation could outweigh any tax revenue from marijuana sales.
Officials in Colorado and Washington warned that the marijuana revenue numbers were only their best guesses for the moment and could shift, depending on marijuana prices, demand, the number of cities that prohibit marijuana retailers and other factors. In Washington, where retail sales have not begun, Mr. Carlyle said it was far too early to say how marijuana might affect the state’s pocketbook.
“Many of us have been emphatic at trying to temper expectations,” he said.
Across Colorado, Thursday was one of the most nerve-racking days of the year for marijuana businesses. Some sellers have hired third-party companies to handle their finances, but many run almost entirely on cash because so few banks are willing to do business with them.
Gerardo Uribe is described by business associates as honest and professional, a “gentle soul” who methodically built a medical marijuana empire in Colorado. While he struggled at times to get financing, the 33-year-old Uribe made a point of emphasizing following the rules, aware his Colombian heritage might invite suspicion, one business partner said.
In a recent court filing, federal prosecutors describe Uribe in different terms — as the head of an organization targeted in a long-term investigation into the alleged illegal production and distribution of marijuana, money laundering and other offenses.
Search warrant for Denver marijuana raids
On Nov. 21, federal agents executed search warrants on 14 businesses and two homes in the largest raid ever on Colorado’s medical marijuana industry, rousting a part-time manager as he got his children ready for school in Nederland and busting down doors in Denver.
Sources told The Denver Post that the raids were chasing possible connections to Colombian drug cartels, although investigators haven’t publicly accused any of the businesses of wrongdoing. The raids gutted grow warehouses, cost businesses millions in inventory, and forced owners to close stores and lay off employees, although many of the businesses have since reopened.
The government has identified a dozen people in the ongoing investigation. All but one is connected to a chain of five medical marijuana dispensaries and about a half-dozen marijuana grows controlled by Uribe, his relatives or associates, records show.
Among the Uribes’ raided businesses was VIP Cannabis in Denver, thought to be one of the highest volume dispensaries in the state.
The individuals involved include Uribe’s father, brother and a cousin; a Denver lawyer who represented the Uribe businesses and became an owner himself; and a Cuban national locked up in a Florida prison who used to work in one of the raided dispensaries and allegedly tried to order a hit on one of the owners, according to court records.
Uribe has not been charged, and his lawyer has said he has done nothing wrong. Only one individual has been arrested so far in connection with the raids — a Colombian national facing a gun charge.
The Post was not able to identify through business records any link between the VIP Cannabis-affiliated individuals and another raid target, Laszlo Bagi. The parties say they are not connected.