Proponents of drug legalization argue that decriminalization will boost state coffers by taxing the activity and putting the money to good use. Colorado, which has embraced legal marijuana, is testing this theory in a big way.
Colorado officials report the state collected $2 million in taxes from recreational marijuana sales in January, and another $1.5 million in taxes off the sale of “medicinal” marijuana. That may sound great for those interested only in state finances. But here’s the catch: The governor’s budget office predicted marijuana taxes would total $134 million this year with recreational marijuana accounting for about 60 percent of sales. In fact, Gov. John Hickenlooper’s office estimated recreational marijuana would generate $35 million in taxes from January through June. Current collections are on pace to reach just over a third of that amount.
If state officials were treating those collections as found money, this might not matter. But under Colorado law, the first $40 million in recreational marijuana taxes goes to school construction each fiscal year. January’s collections suggest schools won’t come close to receiving that amount.
This puts education officials in an awkward position. For schools to get more money requires more people to engage in an activity with negative consequences. It’s comparable to hospital officials hoping more people will smoke tobacco to increase health care funding.
This demonstrates why major changes in social policy should be enacted based solely on policy considerations, not unrelated fiscal challenges. Too often, major changes in social policy are adopted, at least in part, as a way to raise money “for the children” — typically schools. The end result, however, is that a major policy change occurs without generating the promised financial benefits for education.
In this regard, the outcome in Colorado so far isn’t exceptional, even if its status as a promised land for pot enthusiasts is.