This year, Colorado proved just how profitable marijuana can be.
In the first ten months of 2016, Colorado topped $1 billion in marijuana sales, according to the Department of Revenue. By the end of October, the state had racked up $1.1 billion in legal sales of medical and recreational marijuana — a number that easily topped the $996 million in revenue reported in 2015.
Last week, New Frontier Data, in partnership with Arcview Market Research, released its Colorado Legal Cannabis Market State Profile, which shows that medical sales alone will jump up to $438 million by the end of 2016 and will reach $663 million by 2020. Recreational sales are expected to spike even higher — surging to $739 million in 2016 and climbing to $1.34 billion by 2020.
"The naysayers said the sky would fall in Colorado and that the tax money and jobs wouldn't ever really materialize. The naysayers were wrong," says Troy Dayton, CEO of Arcview. "Colorado's market has surpassed almost everyone's expectations in terms of sales and societal benefits. It's one of the reasons that national public support for adult-use legalization has skyrocketed to 60 percent."
These numbers could even be on the low end. An April article in Forbes included an Arcview estimate that Colorado would rake in $135 million in taxes by the end of this year, almost doubling the $70 million brought in during the 2014-’15 fiscal year. But just in the first ten months of this year, the state collected $151.4 million from retail sales.
In 2012, Colorado voters approved Amendment 64, which legalized recreational marijuana, partly on the promise that those taxes would be diverted into funding schools — and they have...just not as much as some people would like.
"I think people were expecting to see a lot more of an impact, that this money would bring a gym to their specific school. It's just not enough money to do stuff like that," says Andrew Freedman, Colorado's director of marijuana coordination.
About $40 million of the taxes that came into the state last year went to schools, according to Freedman, and next year that number could be closer to $50 million. Unfortunately, it's barely making a dent.
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There is an estimated $15 billion needed for school construction, and the taxes from pot would cover less than a tenth of a percent of the need, Freedman says.
To put the rest of the revenue to use, Governor John Hickenlooper has submitted a budget proposal for the upcoming fiscal year that asks lawmakers to set aside $12.3 million of the revenue from marijuana taxes to build 1,200 homes for Colorado's homeless population.
“As the first state to legalize adult-use cannabis, Colorado has been a leader in pioneering the legal industry," Giadha Aguirre DeCarcer, CEO and founder of New Frontier Data, says in a statement accompanying the year-end report. "Colorado has become the epicenter of cannabis, being the first state to develop and activate well-regulated medical and adult-use cannabis markets. They have responded quickly and effectively to potentially crippling market disruptions and have been both cautious in their approach to ensure public health and safety while understanding business considerations and market growth potential."