Pubdate: Wed, 19 Mar 2014
Source: Denver Post (CO)
Copyright: 2014 The Denver Post Corp
Author: John Ingold
Page: 4A


Gov. Hickenlooper overestimates tax revenues from marijuana,
legislative economists predict.

Colorado legislative economists on Tuesday predicted that recreational
marijuana taxes will bring in only half of what Gov. John Hickenlooper
expects they will.

A forecast produced by economists at the nonpartisan Colorado
Legislative Council projects taxes on recreational marijuana will
generate about $65 million in the fiscal year beginning in July.
Hickenlooper's projection, released last month, expects nearly twice
that-$125 million.

The new prediction further adds to the debate over how lucrative
first-in-the-nation taxes on recreational marijuana will be for the
state's coffers. In January, tax revenue came in on pace to be far
below previous predictions for the last six months of the current
fiscal year.

But Legislative Council economist Larson Silbaugh told members of the
legislature's Joint Budget Committee on Tuesday that too many
variables - from the low number of stores open, to the high interest
in history-making marijuana purchases - make the January numbers
unreliable predictors of what's to come.

"You can basically use that January number to justify any forecast you
want," he said.

Instead, Silbaugh said Legislative Council economists are more
pessimistic than the governor's economists about how many people will
stay in the recreational marijuana market long-term. Recreational
marijuana costs about 20 percent more than medical marijuana, he said.
And that's before the hefty taxes on recreational marijuana are applied.

Silbaugh said legislative economists believe many people will decide
it is more cost-effective to remain medical-marijuana patients. While
such patients must pay up front for a doctor's evaluation and a state
registration fee, medical-marijuana purchases are subject only to the
state's general 2.9 percent sales tax.

"We're not expecting a lot of new marijuana users because of retail
marijuana," Silbaugh said. "And we're not expecting because of the
price differential, many medical marijuana users shifting over to the
adult use market."

For that reason, legislative economists predict Colorado marijuana
stores will do more than $750 million in recreational and medical
marijuana sales in the coming fiscal year. Hickenlooper's economists
have put that figure at nearly $1 billion.

However much recreational marijuana taxes generate, Hickenlooper has
proposed using all of the money to deal with issues related to
marijuana legalization-including funding drug treatment and youth
drug-use preventions. Lawmakers are considering the proposal.
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