Pubdate: Sat, 03 Jan 2015
Source: Honolulu Star-Advertiser (HI)
Copyright: 2015 Associated Press
Contact: 
http://www.staradvertiser.com/info/Star-Advertiser_Letter_to_the_Editor.html
Website: http://www.staradvertiser.com/
Details: http://www.mapinc.org/media/5154
Author: Kristen Wyatt, Associated Press

MARIJUANA TAXES GIVE STATES A BOOST BUT ARE NO WINDFALL

DENVER (AP) - To see the tax implications of legalizing marijuana in 
Colorado, there's no better place to start than an empty plot of land 
on a busy thoroughfare near downtown Denver.

It is the future home of a 60,000-square-foot public recreational 
center that's been in the works for years.

Construction costs started going up, leaving city officials wondering 
whether they'd have to scale back the project. Instead, they hit on a 
solution: tap $3.2 million from pot taxes to keep the pool at 10 
lanes, big enough to host swim meets.

The Denver rec center underscores how marijuana taxation has played 
throughout Colorado and Washington. The drug is bringing in tax 
money, but in the mix of multibillion-dollar budgets, the drug is a 
small boost, not a tsunami of cash.

Much of the drug's tax production has been used to pay for all the 
new regulation the drug requires - from a new state agency in 
Colorado to oversee the industry, to additional fire and building 
inspectors for local governments to make sure the new pot-growing 
facilities don't pose a safety risk.

And estimates for pot's tax potential varied widely.

Some government economists predicted a huge boost to public coffers. 
Others predicted a volatile revenue stream that could spike wildly 
based on how consumers and the black market would respond.

Some even guessed that legal weed would cost more than it produced in 
taxes, through higher public safety costs and possible expensive 
lawsuits because the drug remains illegal under federal law.

In Colorado, where retail recreational sales began Jan. 1, 2014, the 
drug has a total effective tax rate of about 30 percent, depending on 
local add-on taxes.

Through October, the most recent figures available, Colorado 
collected about $45.4 million from sales and excise taxes on 
recreational pot sales.

That puts the state on pace to bring in less than the $70 million a 
year Colorado voters approved when they agreed to a statewide 10 
percent sales tax and 15 percent excise tax on recreational pot.

Voters set aside the first $40 million in excise taxes for school 
construction; so far that fund has produced about $10 million.

But adding fees and licenses and the taxes from medical marijuana 
sales, Colorado had collected more than $60 million through October. 
Local governments can add additional taxes, too.

That's what led to additional revenue streams like Denver's $3.2 
million for a bigger pool at its rec center.

In Washington, where recreational pot sales began in July, 
recreational weed is taxed on a three-tier system as the plant moves 
from growers to processors to retailers. The total effective tax rate 
is about 44 percent.

State tax officials are just getting a look at the first few months 
of pot taxes, and the money is coming in slowly because there aren't 
many stores there yet. State economists have predicted pot sales will 
bring in $25 million by July.

The state anticipates a $200 million increase by mid 2017, and about 
$636 million to state coffers through the middle of 2019.

There remain more questions than answers about pot's tax potential.

A new president in 2017 could sue legal-weed states to shut down 
sales completely.

And no one knows how the opening of new recreational markets will 
drain sales from Colorado and Washington. Oregon voters have approved 
retail pot sales beginning in 2016; Alaska has approved sales, but 
it's not clear when they'll begin.

And the biggest market in the West - California - is expected to 
consider recreational pot legalization in 2016.

In other words, budgeters curious about marijuana's tax potential 
will have to wait.

"If they're looking at pot as something that might swoop in and save 
them, they need to keep looking," said Joseph Henchman, an analyst 
who has studied marijuana tax collections for the Tax Foundation, a 
nonpartisan tax think tank.
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MAP posted-by: Jay Bergstrom