The Colorado Department of Revenue released a comprehensive report on its first year of retail cannabis operations. It’s probably not as compelling as the latest cat video, but it’s pretty fascinating if you’re interested in seeing how legal marijuana actually fared its first year.
The numbers are pretty impressive: $700 million in total sales; about $76 million collected in state taxes; almost 5 million edibles and more than 150,000 pounds of flower weed sold. As of Dec. 31 there were 15,992 employees (up from 6,593 on Jan. 1) working in 2,249 licensed businesses (up from 1,734 at the beginning of the year). Statewide, there were 833 retail outlets and 505 medical dispensaries with licenses. Since Amendment 64 allows local control over sales, all that marijuana was sold in just 67 of Colorado’s 321 local jurisdictions.
Prohibitionists like to use that last number as proof legalization isn’t wanted by citizens, but I think the opposite is true. Given cannabis’ past, many jurisdictions are taking a wait-and-see attitude, which is fine. But at this point they should begin looking carefully at what’s happening in places where retail sales are being allowed.
Take Boulder as an example. Currently there are 79 businesses licensed to grow, make, infuse or sell medical and retail cannabis in town. That breaks down to 14 recreational dispensaries, 15 medical wellness centers, 22 recreational grows, 22 medical grows and six manufacturers of infused products for both recreational and medical. There are no licensed testing facilities.
The city taxes all marijuana, medical or recreational, at the sales and use base rate of 3.56 percent. Bob Eichem, the city’s chief financial officer, says that marijuana money contributed $1.9 million to general city operations in 2014 destined for transportation, parks and recreation, open space, fire, police, library, human services, finance, etc.
Boulder voters added an additional 3.5 percent city tax and a 5 percent excise tax on grow facilities when shipping to dispensaries, and the city gets a share of state taxes, all of which are called “incremental” revenue. For recreational cannabis, that amounted to an additional $618,602 from the city’s 3.5 percent tax, $430,243 from the excise tax and $294,944 in shareback money from the state.
The city had estimated that it would receive $2 million in incremental taxes.
“However, we expected that it could fall short since it was the first year,” Eichem says. So the city was prudent, only appropriating $513,470 (for extra police time, legal counsel, licensing clerks, etc.), $250,000 for youth education and $400,000 for contingency funding.
“This total of $1,163,470 came out of the approximately $1.3 million actually received by the city,” Eichem explains, and that difference ($136,530) will be appropriated by the city council at a future time.
“The difference between the $2 million total projected for the incremental tax and the approximately $1.3 (million) that was actually received never occurred,” Eichem says. “It had been anticipated that it may happen due to the large number of unknowns when we made the projections, and the amount was not budgeted for use in 2014, so the city could wait to see what actually happened. Since it did not occur and it was not budgeted to be spent there was no operational impact on the city — and I am very glad we did it that way.”
Continued problems with cannabis businesses unable to get access to the banking system means that many businesses still pay in cash. The city has adjusted its payment processing to adapt and has experienced no problems.
“Normal safety features are in place for all cash transactions we handle,” Eichem says.
Another factor to consider is that there were few enforcement problems or unanticipated costs. The city revoked no cannabis licenses, says Mishawn Cook, the city’s license and collection manager. She says there were six violations during the year, including ones for inoperative cameras, unapproved business managers and not making marijuana waste unusable and unrecognizable before disposal. Each was handled with a fine or other negotiated settlement.
“We did have one failed compliance check for underage sale, and that was also handled with a fine,” she says.
As a comparison, there are 253 issued liquor licenses in the city. In 2014, there were 17 violations, which went to the Beverage Licensing Authority for show cause hearings. So not much difference there.
All in all, Eichem says he feels the city was pretty careful and deliberate in its approach to a new industry mandated by voters that had been illegal for decades and still considered criminal under federal law. There were no real unanticipated strains on the system.
“The police added overtime for inspections, but no departments came back for additional funds,” Eichem says. “We did a good job.”
You can hear Leland discuss his most recent column and Colorado cannabis issues each Thursday morning on KGNU. http:// news.kgnu.org/weed