Winnipeg Free Press - PRINT EDITION

Colorado proposal puts pot tax to good use

Revenue projections jump

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DENVER -- Colorado's legal marijuana market is far exceeding tax expectations, says a budget proposal released Wednesday by Gov. John Hickenlooper that gives the first official estimate of how much the state expects to make from pot taxes.

The proposal outlines plans to spend some $99 million next fiscal year on substance abuse prevention, youth marijuana use prevention and other priorities. The money would come from a statewide 12.9 per cent sales tax on recreational pot. Colorado's total pot sales next fiscal year are estimated at about $610 million.

Retail sales began Jan. 1 in the state. Sales have been strong, though exact figures for January won't be made public until early next month.

The governor predicted sales and excise taxes next fiscal year would produce some $98 million, well above a $70 million annual estimate given voters when they approved the pot taxes last year. The governor also includes taxes from medical pot, which is subject only to the statewide 2.9 per cent sales tax.

Washington state budget forecasters released a projection Wednesday for that state, where retail sales don't begin for a few months.

Economic forecasters in Olympia predicted the state's new legal recreational marijuana market will bring nearly $190 million to state coffers over four years, starting in mid-2015. Washington state sets budgets biennially.

In Colorado, Hickenlooper's proposal listed six priorities for spending the pot sales taxes.

The spending plan included $45.5 million for youth use prevention, $40.4 million for substance abuse treatment and $12.4 million for public health.

"We view our top priority as creating an environment where negative impacts on children from marijuana legalization are avoided completely," Hickenlooper wrote in a letter to legislative budget writers, who must approve the plan.

The governor also proposed a $5.8-million, three-year "statewide media campaign on marijuana use," presumably highlighting the drug's health risks. The state Department of Transportation would get $1.9 million for a new "Drive High, Get a DUI" campaign to tout the state's new marijuana blood-limit standard for drivers.

Also, Hickenlooper has proposed spending $7 million for an additional 105 beds in residential treatment centres for substance-abuse disorders.

"This package represents a strong yet cautious first step" for regulating pot, the governor wrote. He told lawmakers he'd be back with a more complete spending prediction later this year.

The Colorado pot tax plan doesn't include an additional 15 per cent pot excise tax, of which $40 million a year already is designated for school construction. The governor projected the full $40 million to be reached next year.

The initial tax projections are rosier than those given to voters in 2012, when state fiscal projections on the marijuana-legalization amendment indicated $39.5 million in pot sales taxes next fiscal year, which begins in July.

The rosier projections come from updated data on how many retail stores Colorado has (163 as of Feb. 18) and how much customers are paying for pot. There's no standardized sales price, but recreational pot generally is going for much more than the $202 an ounce forecasters guessed last year.

Mason Tvert, a legalization activist who ran Colorado's 2012 campaign, said other states are watching closely to see what legal weed can produce in tax revenue.

"Voters and state lawmakers around the country are watching how this system unfolds in Colorado, and the prospect of generating significant revenue while eliminating the underground marijuana market is increasingly appealing," said Tvert, who now works for the Marijuana Policy Project.

 

-- The Associated Press

Republished from the Winnipeg Free Press print edition February 20, 2014 B12

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