Colorado economists: Pot revenue won’t be as high as the governor thinks

Greg Campbell | Contributor

How much tax revenue will Colorado raise from legalized marijuana? A new analysis from the state economist puts the figure much lower than Gov. John Hickenlooper has estimated.

Hickenlooper outlined a spending plan for drug treatment, education, and regulatory enforcement based on a $125 million annual windfall from pot taxes.

But a report by the economics section of the Colorado Legislative Council Staff presents a less rosy forecast — $62.7 million in total taxes for fiscal year 2013-14 and $132 million in fiscal year 2014-15.

The tallies include Colorado’s regular 2.9 percent sales tax on both medical and recreational marijuana, and a 15 percent excise tax and 10 percent special tax on recreational marijuana alone.

The new estimate is closer to the $67 million that was predicted before voters approved the taxing scheme in 2013.

But the report comes with a series of caveats.

“To date, only data on January tax collections are available, and collections in that month may not be representative of sales patterns for the entire fiscal year,” the authors wrote. “Because historical sales data do not exist to forecast marijuana tax revenues, the accuracy of the forecast depends on the accuracy of the assumptions which underlie it.”

Sales tax revenue could go down from January’s numbers if the novelty has worn off, the authors wrote, or it could go up as more stores open across the state.

“For now, the assumptions used to model the marijuana market are based on self-reported usage of a formerly banned substance and price assumptions from a still-developing market,” the authors noted. “This forecast may be overstated, in that it is based on the statutory tax rates and the assumption that the unregulated marijuana market will disappear and all unregulated marijuana users will enter the regulated market.”

“The accuracy of the forecast will undoubtedly improve as more data become available and the regulated adult-use marijuana market matures.”

Also on Tuesday, Buzzfeed published an interview with Hickenlooper, who opposed legalizing marijuana, who admitted that the state’s image hasn’t suffered because of it, as he’d feared.

He credits the strict regulations around the industry.

“We haven’t seen [negative impact] yet,” he told the site. “That’s why we have been so aggressive and rigorous with implementing the regulations.”

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