3.5% tax yields $8 per person

I’m looking at how California localities might tax cannabis – both medical and eventual adult use – in connection with a panel appearance coming up.

How much might they collect?

In 2014, the City of Denver collected about $8 per man, woman, and child from its 3.5 percent tax on recreational marijuana.

Here’s how I get that number. In 2014, Denver collected $5,290,016 from its 3.5 percent recreational marijuana sales tax.

https://ballotpedia.org/Denver_Retention_and_Continuation_of_Marijuana_Sales_Tax,_Measure_2B_(November_2015); http://www.denvergov.org/sirepub/cache/2/tlkmv145bkvo0zb0wvvh3dre/74053701202016122743211.PDF.

Denver’s population is around 660,000 — http://www.metrodenver.org/do-business/demographics/population/.

That’s about $8 per man, woman, and child from that 3.5 percent tax alone. And 2015 should show more, as sales, at least state-wide, are increasing.

Colorado will probably have just under $1 billion in sales for all forms of cannabis for 2015. http://www.thecannabist.co/2016/01/13/colorado-pot-1-billion-2015/46550/. That’s roughly $200 per man, woman, and child. That is up from about $700 million in 2014. http://www.thecannabist.co/2015/07/13/may-colorado-pot-school-tax-marijuana/37839/

Some big caveats:

Colorado was the first state to get up and running – so lots of sales may be attributed to tourists and exports. Denver sales account for over a third of what’s sold in the state, with about 13 percent of the state’s population. Lots of jurisdictions in Colorado don’t have legal sales, so Denver gets a lot of business from folks who live in other parts of the state, plus lots of tourists.

Finally, a word from voters: In connection with Colorado’s weird TABOR tax holiday, in November 2015, Denver voters approved keeping all the money and continuing the tax – 81% to 19%. The first city approval passed only 68-32 in 2013. http://www.lwvdenver.org/ballot-issues.html

Note: Sales of recreational marijuana in Denver alone in 2014 must have been $151,143,314 – doing the math. That’s about $229 per capita.

 

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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