Colorado, one of the two US states to legalize recreational marijuana in 2012 has some good news regarding pot legalization. According to reports, legal marijuana sales – both medical and recreational – have earned more than $1 billion, giving the state over $135 million in taxes and licensing revenues last year alone. A good portion of these additional funds will be used to fund Colorado schools, including law enforcement and drug abuse projects.
Marijuana distribution platform Tradiv reported an encouraging turn of events for Colorado cannabis consumers: legal pot prices are now much more competitive with the black market, with wholesale costs falling from $2,400 to $2,600 per pound in 2015 to $1,400 to $1,600 today. This sudden drop has made cannabis more accessible to normal consumers, which could potentially result in more revenue for the state’s government as consumers buy through legal methods.
In May, Colorado extended a moratorium on new marijuana licenses, letting in big players to purchase the available licenses. There is also a limit on the number of marijuana plants a facility can cultivate in Colorado, allowing these big businesses to boost production and in essence, provide more pot for consumers even if there is a limited demand.
In Colorado, demand appears not to be driving competition in Colorado, according to NWI. Instead, oversupply from oligopolies is driving prices down which in turn could push smaller marijuana retailers out of the market.
But the tax revenue from marijuana sales has been positive for some areas of Colorado, where the money has been funneled for improvements such as new civic facilities, homeless programs, mental health centers and other infrastructure projects, NPR reports.
Chris Stiffler, a nonpartisan analyst with the Colorado Fiscal Institute, says that there should be some caution and tempered expectations when it comes to the marijuana tax revenue, and that the money might not be coming in forever. Tax analysts also say additional revenues should also not be the main reason people support marijuana legalization.