Legal Pot Rakes In Taxes, but Colorado Schools Aren't Rolling in It

Schools will benefit financially from legal marijuana taxes, but how much?

(Photo: Getty Images)

Apr 15, 2014· 2 MIN READ
Hayley Fox is a regular contributor to TakePart who has covered breaking news and the occasional animal story for public radio station KPCC in Los Angeles.

After fewer than four months of legalized recreational pot smoking, Colorado schools will be seeing an influx of another type of green: money.

By June 30, 2015, the state expects to have generated $184 million in pot-related tax revenue—and at least $40 million is expected to go to schools alone.

As most teachers can tell you, any time there's money for education, it's welcome, but pot money is just a drop in the bucket for Colorado's schools.

The state's 178 school districts received more than $5.5 billion in public funds from the government for the 2013–2014 budget year. Of that, state taxes earned Colorado's schools about $3.5 billion, local property taxes brought in $1.9 billion, and vehicle registration taxes brought in $131 million.

To put a finer point on it: An average teacher salary in Colorado was about $49,000 in 2011, according to the most recent stats available from the state. A quick calculation using those numbers shows that pot money could, in theory, cover salaries for little more than 800 teachers. All told, the state had about 48,000 full-time teachers for more than 850,000 students in 2011.

Other earmarks for the remainder of the pot tax income include funds for substance abuse treatment and the prevention of marijuana use in youths, according to Gov. John Hickenlooper's request to Colorado’s Joint Budget Committee.

Colorado's tax projections have had other states, and other countries, watching the numbers since marijuana became legal on Jan. 1. Policy watchers from across the U.S. and parts of Western Europe have flocked to Colorado to participate in junkets and observe commerce, said Allen St. Pierre, executive director of the National Organization for the Reform of Marijuana Laws.

“There can be no doubt at all that Colorado, and very soon Washington state, are serving as clear petri dishes for other states and countries,” said St. Pierre.

Although Washington has passed a marijuana legalization initiative, it’s a few months from taking effect.

This is in part because the state’s existing marijuana industry was opposed to legalization and slowed the process, said St. Pierre, unlike the “well-established medical marijuana” industry in Colorado that supported legalization.

Washington also faces bureaucratic hurdles as the state’s liquor control board establishes a permitting process for pot to be sold alongside alcohol in state-controlled shops. With marijuana tax levels set at a hefty 25 percent, the state anticipates making up to $2 billion in tax revenue over the first five years.

Reformers have long argued that extremely high taxes on “vice” items such as alcohol and tobacco discourage people from buying those goods, said St. Pierre, and allow society to profit from those who still do.

While these two states are the first to legalize recreational pot use in the U.S., they likely won’t be the last. According to a recent report from Pew Research, many Americans see marijuana as less harmful than alcohol, and 75 percent of those polled think the sale and use of marijuana will eventually be legal nationwide.

Although pot is illegal under federal law, the U.S. government recently issued guidelines that give banks a little leeway to provide services to marijuana businesses. Whether these vague new rules will give banks the confidence they need to work with pot vendors without fear of prosecution is to be seen.

Next up for legalization are most likely Oregon and Alaska, said St. Pierre, but it is California that will make or break the future of pot.

“There can be no national legalization without California,” said St. Pierre. “So goes California, so goes the world, regarding cannabis.”

Last year the medical marijuana market in California was valued at $980 million, a number that would only grow with legalized adult use. There is support for a pot legalization measure on California’s 2016 ballot.