WASHINGTON — Legal marijuana was a $700 million dollar industry in Colorado last year, according to a Washington Post analysis of recently released tax data from the state’s Department of Revenue. In 2014, Colorado retailers sold $386 million of medical marijuana and $313 million for purely recreational purposes. The two segments of the market generated $63 million in tax revenue, with an additional $13 million collected in licenses and fees.
The total economic impact of the state’s marijuana industry is likely greater, as these figures don’t include retail sales of products related to marijuana, like pipes and bongs, and they don’t account for increased tourist spending in other segments of Colorado’s economy, like hotels and restaurants.
With a full year of data to work with, the state has a clearer picture of what to expect from its marijuana market going forward. Total marijuana tax revenues are now expected to climb to $94 million annually by 2016, according to the latest projections. This would equate to a $1 billion dollar retail market.
The revenue figures are high enough that Colorado now finds itself in the enviable situation of having to figure out what to do with all that money. And it’s catching the attention of other states, like Vermont, now considering legalization.
But Colorado’s pot businesses aren’t necessarily rolling in dough. Marijuana growers and retailers aren’t eligible for the wide variety of tax deductions available to other businesses, which could take a huge bite out of their profits. Banks are also hesitant to do business with the marijuana industry for fear of a federal crackdown, which makes legal weed a de-facto cash-only proposition, with all of the risks and dangers that entails.
The federal government has been taking steps — albeit small ones — to help integrate the marijuana industry with the rest of the market. Late last year the IRS issued a memorandum assuring accountants who file taxes for marijuana businesses that they won’t face increased risk of an audit or penalties. And tucked within December’s last-minute spending compromise was a measure forbidding the Drug Enforcement Agency from raiding medical marijuana outlets, provided those outlets are in compliance with state law.
Colorado has implemented a $700 million marijuana market without any of the dire consequences that legalization opponents warned about. Fatal car accidents in the state are flat, and well below the past-decade average. Crime is down in Denver and the surrounding area. While some societal effects of marijuana legalization may not make themselves fully known until several years down the line, the first year of legal weed in Colorado went smoothly.
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