Menus Subscribe Search

Follow us


The Future of Money

grow-house

Inside a Denver-area grow house. (Photo: Coleen Danger/Flickr)

How Drug Money Is Funding Drug Education

• March 12, 2014 • 10:00 AM

Inside a Denver-area grow house. (Photo: Coleen Danger/Flickr)

Projected revenue figures for Colorado on marijuana taxes have been revised up and up and up, and Governor John Hickenlooper plans to put almost all of that money toward public health and addiction prevention programs.

On February 19, Colorado Governor John Hickenlooper did something unexpected. He announced a state spending plan for nearly $100 million, with the vast majority of the funding devoted to improving drug awareness, addiction prevention, and public health—an enviable sum for any government to put toward normally difficult-to-fund initiatives. Even more surprising is that every dollar of that amount will come from tax revenues on the sale of drugs that were illegal until this year.

Colorado legalized recreational marijuana use last year, but the first retail marijuana stores have only opened in the past few months—the state now has over 150 of them. The initial results are staggering, not just for the individual cannabis businesses but also for the state itself. Tax revenues from recreational marijuana sales, which hit $2 million in January, have exceeded all expectations. Voters were initially given a projection of $70 million in marijuana tax revenue, but the government now expects over $130 million in sales and excise taxes in the next fiscal year, beginning July 1. (Washington, which has also legalized marijuana sales but hasn’t opened the floodgates yet, expects $190 million over the next four years.)

For every recreational marijuana sale in Colorado, there’s a 2.9 percent sales tax, a 10 percent additional sales tax (part of which goes to local governments where the sales take place), and a 15 percent excise tax. On top of that, the state will earn an expected $2 million in the next fiscal year from the fees that businesses pay for licenses to sell the drug. The 28 percent net tax on marijuana is actually less than the rate for tobacco products, which is 40 percent in Colorado.

Legal marijuana is the rare industry that’s campaigning for its own regulation, high taxes, and strict oversight, in sharp contrast to Silicon Valley start-ups like Uber and AirBnB.

Under the new recreational cannabis law, the first $40 million earned through the excise tax will go toward building new schools in the state. With the governor’s proposal, the remainder of the revenue will be funneled into educational programs around marijuana, “creating an environment where negative impacts on children from marijuana legalization are avoided completely,” Hickenlooper wrote in a letter to the budget committee.

It’s a strange irony that legalizing a drug still outlawed by the federal government could allow for more resources to be devoted to preventing its negative effects. But that’s exactly what’s happening in Colorado—the marijuana tax has proven so effective at raising public funds that there’s more than enough money to combat the criticism that recreational marijuana will lead to more addiction. In fact, with the new initiatives, it could lead to fewer drug problems all around.

The money that the recreational marijuana tax raises is strictly limited as to where it can be put to use. In his letter, Hickenlooper laid down two guidelines: “programming should have a direct or indirect relationship to marijuana use, and we should not create any situations where State or local government has an incentive to promote marijuana use.”

To that end, the plan allocates around $45 million of the funding to “youth marijuana use prevention and deterrence” and another $42 million to “substance abuse treatment,” including adding space to existing drug treatment facilities. Public health programs will see a $9 million cash infusion. And $15 million will be distributed between law enforcement and public safety and regulatory oversight, reinforcing the laws already put into place to limit marijuana sales and use. On top of that, the state expects a surplus, and will likely end the next year with $12 million in a Marijuana Cash Fund.

This spending is as good for cannabis businesses as it is for the state. Legal marijuana is the rare industry that’s campaigning for its own regulation, high taxes, and strict oversight, in sharp contrast to Silicon Valley start-ups like Uber and AirBnB that are making a case for less government intrusion in the commercial sphere, deregulating public transportation and residency restrictions in the name of market-induced efficiencies.

The distribution in FY 2014-15 of the existing enforcement monies as well as the requested allocation of all marijuana-r elated sales and excise taxes and expected matching funds. (Chart: Colorado's Office of the Governor)

The distribution in FY 2014-15 of the existing enforcement monies as well as the requested allocation of all marijuana-related sales and excise taxes and expected matching funds. (Chart: Colorado’s Office of the Governor)

MICHAEL ELLIOTT IS THE executive director of the Marijuana Industry Group (MMIG), a trade association of marijuana companies that launched in 2010 to participate in creating the framework for Colorado’s cannabis industry. The group is a kind of enlightened lobbying firm, pushing lawmakers to set a high bar for marijuana entrepreneurs and their businesses.

When Hickenlooper published his plan for the marijuana tax revenue, Elliott responded in a newsletter, noting MMIG’s concern over whether the state had enough resources to police the marijuana business. “It is imperative the Department of Revenue is funded adequately so it can vigorously enforce state regulations and ensure that everyone in the industry is abiding by the rules,” Elliott wrote.

An early audit “made it very clear that state marijuana division could not do its job because of a lack of funding,” Elliott says. “They really need to have everything that they ask for and then a reserve as well.” Getting this line from a marijuana business insider is like hearing a Big Tobacco lobbyist call for more lung cancer research. But there’s a burgeoning conflict behind the marijuana tax revenue that’s worrying Elliott and the companies he represents.

“We can all agree that kids should not be using marijuana,” he says. “But that money has to be spent on evidence-based programs. It has to be neutral and objective.” MMIG is concerned that the marijuana education money could go toward groups that are actually trying to overturn legal marijuana laws. “The money should not be available for them, nor to me and my organization to tell people how awesome marijuana is,” Elliott says. “It ensures that we’re not giving away money simply to overturn the will of voters.”

Though the marijuana education initiatives will no doubt warn against the dangers of addiction, proponents are also hoping that some of the stigma associated with the drug is also removed. “In the 1930s, ’40s, ’50s, marijuana education was the government telling you marijuana will make you crazy, a homicidal maniac. The ’80s weren’t much better,” Elliott says. “We shouldn’t be lying to kids. We need to bring integrity to education.”

The initial hurdle of marijuana legalization has been crossed in Washington and Colorado, and the success of the taxes should motivate more states to pass liberal marijuana laws. But as the spending concerns show, the war on the drug’s public perception is far from over.

That the marijuana market is moving away from its outlaw roots is clear. “For every $1 of tax revenue, that’s $1 being taken away from the black market and given over to state and local governments,” Elliott says. “That’s not going to solve our debt crisis, but it is a pretty phenomenal thing.”

Kyle Chayka
Kyle Chayka is a freelance technology and culture writer living in Brooklyn. Follow him on Twitter @chaykak.

More From Kyle Chayka

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

December 20 • 10:28 AM

Flare-Ups

Are my emotions making me ill?


December 19 • 4:00 PM

How a Drug Policy Reform Organization Thinks of the Children

This valuable, newly updated resource for parents is based in the real world.


December 19 • 2:00 PM

Where Did the Ouija Board Come From?

It wasn’t just a toy.


December 19 • 12:00 PM

Social Scientists Can Do More to Eradicate Racial Oppression

Using our knowledge of social systems, all social scientists—black or white, race scholar or not—have an opportunity to challenge white privilege.


December 19 • 10:17 AM

How Scientists Contribute to Bad Science Reporting

By not taking university press officers and research press releases seriously, scientists are often complicit in the media falsehoods they so often deride.


December 19 • 10:00 AM

Pentecostalism in West Africa: A Boon or Barrier to Disease?

How has Ghana stayed Ebola-free despite being at high risk for infection? A look at their American-style Pentecostalism, a religion that threatens to do more harm than good.


December 19 • 8:00 AM

Don’t Text and Drive—Especially If You’re Old

A new study shows that texting while driving becomes even more dangerous with age.


December 19 • 6:12 AM

All That ‘Call of Duty’ With Your Friends Has Not Made You a More Violent Person

But all that solo Call of Duty has.


December 19 • 4:00 AM

Food for Thought: WIC Works

New research finds participation in the federal WIC program, which subsidizes healthy foods for young children, is linked with stronger cognitive development and higher test scores.


December 18 • 4:00 PM

How I Navigated Life as a Newly Sober Mom

Saying “no” to my kids was harder than saying “no” to alcohol. But for their sake and mine, I had to learn to put myself first sometimes.


December 18 • 2:00 PM

Women in Apocalyptic Fiction Shaving Their Armpits

Because our interest in realism apparently only goes so far.


December 18 • 12:00 PM

The Paradox of Choice, 10 Years Later

Paul Hiebert talks to psychologist Barry Schwartz about how modern trends—social media, FOMO, customer review sites—fit in with arguments he made a decade ago in his highly influential book, The Paradox of Choice: Why More Is Less.


December 18 • 10:00 AM

What It’s Like to Spend a Few Hours in the Church of Scientology

Wrestling with thetans, attempting to unlock a memory bank, and a personality test seemingly aimed at people with depression. This is Scientology’s “dissemination drill” for potential new members.


December 18 • 8:00 AM

Gendering #BlackLivesMatter: A Feminist Perspective

Black men are stereotyped as violent, while black women are rendered invisible. Here’s why the gendering of black lives matters.


December 18 • 7:06 AM

Apparently You Can Bring Your Religion to Work

New research says offices that encourage talk of religion actually make for happier workplaces.


December 18 • 6:00 AM

The Very Weak and Complicated Links Between Mental Illness and Gun Violence

Vanderbilt University’s Jonathan Metzl and Kenneth MacLeish address our anxieties and correct our assumptions.


December 18 • 4:00 AM

Should Movies Be Rated RD for Reckless Driving?

A new study finds a link between watching films featuring reckless driving and engaging in similar behavior years later.


December 17 • 4:00 PM

How to Run a Drug Dealing Network in Prison

People tend not to hear about the prison drug dealing operations that succeed. Substance.com asks a veteran of the game to explain his system.


December 17 • 2:00 PM

Gender Segregation of Toys Is on the Rise

Charting the use of “toys for boys” and “toys for girls” in American English.


December 17 • 12:41 PM

Why the College Football Playoff Is Terrible But Better Than Before

The sample size is still embarrassingly small, but at least there’s less room for the availability cascade.


December 17 • 11:06 AM

Canadian Kids Have a Serious Smoking Problem

Bootleg cigarette sales could be leading Canadian teens to more serious drugs, a recent study finds.


December 17 • 10:37 AM

A Public Lynching in Sproul Plaza

When photographs of lynching victims showed up on a hallowed site of democracy in action, a provocation was issued—but to whom, by whom, and why?


December 17 • 8:00 AM

What Was the Job?

This was the year the job broke, the year we accepted a re-interpretation of its fundamental bargain and bought in to the push to get us to all work for ourselves rather than each other.


December 17 • 6:00 AM

White Kids Will Be Kids

Even the “good” kids—bound for college, upwardly mobile—sometimes break the law. The difference? They don’t have much to fear. A professor of race and social movements reflects on her teenage years and faces some uncomfortable realities.



Follow us


Don’t Text and Drive—Especially If You’re Old

A new study shows that texting while driving becomes even more dangerous with age.

Apparently You Can Bring Your Religion to Work

New research says offices that encourage talk of religion actually make for happier workplaces.

Canadian Kids Have a Serious Smoking Problem

Bootleg cigarette sales could be leading Canadian teens to more serious drugs, a recent study finds.

The Hidden Psychology of the Home Ref

That old myth of home field bias isn’t a myth at all; it’s a statistical fact.

The Big One

One in two United States senators and two in five House members who left office between 1998 and 2004 became lobbyists. November/December 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.