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Has Colorado kept its promises to schools since legalising marijuana?

Originally posted on 2nd October 2017, Updated on 30th January 2019

If we’re honest, pot has long been associated with students and their dormitories, so it was arguably rather appropriate that Colorado promised to use some of the money it earned in marijuana tax to invest in education in general and schools in particular.

For practical purposes, the story of Colorado marijuana begins in the year 2000, when Colorado accepted the legalisation of medical marijuana, albeit with restrictions. It took 12 years for Colorado to sanction the private growing of marijuana but only another 2 years for Colorado to develop a full, legal, marijuana market. That marijuana market has become a key source of marijuana tax and hence state revenue. As with all forms of taxation, there’s a lot of interest in how the funds gained have been spent.

Three years later has Colorado kept its promise to help schools?

Figures for marijuana tax effectively date to the tax year 2015-2016 in which the marijuana tax contributed a comparatively small amount of $42.5 million to state coffers of which almost all ($40 million) went to schools. This table shows the total value of tax dollars given to school funds in Colorado.

In the 2016-207 tax year, however, this more than doubled to $105 million, of which the same $40 million went to schools via the BEST programme (Building Excellent Schools Today) and additional funding went to schools via other programmes such as the Early Literacy Competitive Grant Programme. The rest of the money has largely been spent on what could loosely be called “good causes” such as environmental and youth programmes. These figures relate purely to the monies raised by sales tax, the state gained additional revenue from the marijuana market from such charges as fees to dispensaries.

How has recreational marijuana legalisation affected Colorado?

The marijuana market has been growing year on year, bringing its marijuana tax with it and the benefits of this extra revenue have certainly had a visible and meaningful impact, but the reality of the legal marijuana market and its marijuana tax is that it is something of a paradox, albeit a lucrative one. Heavily taxing medical marijuana is politically contentious, hence states need to make their money off recreational users. The justification for levying high taxes on the marijuana market is that the marijuana tax is essentially a sin tax. It’s the modern equivalent of buying an indulgence from a church. The basic idea is that it would be better if you refrained from doing whatever you’re doing, but failing that, at least you’ll pay for the privilege, literally. This creates something of a contradiction when it comes to using the funds.

Officially, states act in the best interests of their constituents and want their constituents to lead healthy lifestyles, but at the same time, as Colorado has shown, states can benefit hugely from the revenue which can be gained from people who choose to lead lifestyles which are officially unhealthy.  At the same time, if the state acknowledges that the activity in question is fine in moderation, then it loses its justification for levying such high taxes. Colorado is navigating its way adroitly around this paradox by officially classing the income from marijuana tax as, essentially, a regular windfall to be used for non-core activities. In reality, however, Colorado’s definition of non-core activities could be held to be somewhat broad. For example, revenue from the marijuana market has been used to refurbish dilapidated school buildings, which is arguably fairly essential to providing young people with an education.

While the economic benefits of marijuana tax can go a long way to convince legislators to accept a legal marijuana market, legislators also have to be realistic about the overall realities of the universal laws of supply and demand.

Right now, Colorado is one of a relatively small number of states where recreational marijuana can be bought openly and legally. This means that the market also benefits from marijuana tourism. This study identifies the full implications of marijuana legalisation in Colorado. Now that Canada has legalised cannabis and more U.S. states open up to it, those looking for legal marijuana will have more options and, even if marijuana tax is set at a federal level (which is highly unlikely), shoppers on the marijuana market will still have a greater range of options to consider and may well prefer to buy their weed as close to home as possible for simple convenience. This means that in the future, while the marijuana tax is likely to be a useful source of revenue for Colorado long into the future, it is unlikely to provide the sorts of funds needed to run an effective, state-wide school programme.

It’s also worth noting, as critics of Colorado legalisation most certainly have, that a black market for marijuana still exists in Colorado and that arrests for illegal possession (particularly under-age possession) are still a fact of life. The fact, however, remains, that people seeking to evade high taxes on desirable items is a fact of life. For example, in the UK, tobacco is perfectly legal and yet the tax on it means that it is also a desirable commodity for smugglers. Similarly underage smoking is illegal and yet it is a reality (ditto alcohol consumption). The difference, however, is that in these instances, police action tends to be against the sellers rather than the users.

In short, while those against it may wring their hands, the fact of the matter is that the legal cannabis market and its associated tax has brought very useful revenue to Colorado and that has benefited a lot of people, including educators and their pupils.


MSNL Team MSNL Team / 30th January 2019

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