Anti-Pot Group Complains That Coloradans Are Not Buying Enough Pot

Denver Post videoDenver Post videoNumbers released by the Colorado Department of Revenue this week indicate that the marijuana industry added $3.5 million to state coffers in January. That includes about $1.3 million from the standard 2.9 percent sales tax, $1.4 million from a special 10 percent sales tax, and $200,000 from a 15 percent marijuana excise tax, plus about $600,000 in license and application fees. Of that total, about $2 million comes from the newly legal recreational segment; the rest comes from medical marijuana, which is subject to the standard sales tax (and the fees) but not the other levies. Recreational sales totaled $14 million in January, the first month in which it was legal to sell cannabis for general consumption.

That's not nearly enough, according to the anti-pot group Project SAM. "It appears that Colorado is falling well short of the state’s revenue projection from marijuana sales," say Patrick Kennedy, the group's chairman, and Kevin Sabet, its executive director, in a press release. A measly $2 million per month, they complain, is "far below estimates claimed by both the Governor and legalization advocates." Last month Gov. John Hickenlooper proposed a spending plan based on recreational marijuana revenue of $118 million next fiscal year, more than twice as high as projected before voters approved legalization in 2012. If revenue continues trickling in at a rate of just $2 million or so a month, it will fall far short of both projections. But how likely is that?

Before we consider that question, let us pause to savor the irony of pot prohibitionists complaining that people are not buying enough pot. If the first month's tax revenue were a lot higher, of course, Project SAM would still have complained, citing the number as evidence that legalization is transforming Colorado into a state of stoned zombies. Either way, the prohibitionists can't lose: No matter what happens in Colorado, it will show legalization is a disaster. 

But is Project SAM right to suggest that annual tax revenue from the recreational marijuana business will be more like $24 million than $118 million next fiscal year? Probably not. Here are a few reasons to think Hickenlooper's projection is more accurate than Project SAM's:

1. A relative handful of recreational pot stores opened for business in January.

2. Thanks to various artificial restrictions on supply, shortages were common.

3. After the first harvests of marijuana from plants grown especially for the recreational market, legal cannabis will be more plentiful.

4. Current cannabis consumers who were repelled by lines, shortages, and high prices will start switching from black-market dealers to legal outlets as the supply expands and prices fall.

5. After the initial adjustment period, new consumers will start venturing into the state-licensed pot shops.

Let's try a (very) rough calculation. A RAND Corporation estimate put total marijuana consumption in Washington at something like 175 metric tons in 2013. Colorado's population is three-quarters the size of Washington's, so let's say Colorado's 2013 consumption was in the neighborhood of 130 metric tons. Assuming that the price of recreational marijuana drops toward the price currently charged for medical marijuana as supply exands, it might go for $10 per gram. To hit a target of $10 million in revenue per month, as projected by Hickenlooper, you'd need about $70 million in sales, or $840 million for the whole year. At $10 a gram, that's 84 million grams, or 84 metric tons, which is 65 percent of 130 metric tons, the total pre-legalization market. Since the market is apt to expand as a result of legalization, if state-licensed stores manage to attract half of it next fiscal year, Hickenlooper's projection looks pretty plausible. More plausible, anyway, than $24 million in annual revenue, which means $168 million in sales—in this scenario, about 17 metric tons, or 13 percent of the pre-legalization market.

I've never been a big fan of tax revenue as an argument for marijuana legalization. But it seems to me that prohibitionists cannot have it both ways. If legalization leads to a huge increase in consumption, as they predict, it will generate substantial tax revenue. Whether that counts as a benefit or a cost of legalization is another question.

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  • ||

    These prohibitionist are literally retarded. Seriously, they have extra chromosomes.

  • AlmightyJB||

    Moral certainty and cluelessness is a hell of a combo.

  • Mainer2||

    In the case of Patches Kennedy, it's a result of all the inbreeding.

  • ||

    Retardation is commonly caused by a combination of mercury/lead/dog shit poisoning. It's an unfortunate side effect of spending your time down on your hands and knees licking statists' boots.

  • AlmightyJB||

    What are the estimates for court and prison savings. I would say LE savings but we know that those ranks will never shrink.

  • Agile Cyborg||

    Even to breathe 'LE savings' makes the F.O.P. shit elephants.

  • EDG reppin' LBC||

    Also missing from the calculation are the pot shop employee wages earned (and taxed). What about the increase in productivity (subsequently taxed) from people who aren't incarcerated and losing their jobs? With all that commerce happening, what about the holy grail of MULTIPLIER?!!

  • AlmightyJB||

    Multiplier only works with public money silly.

  • Francisco d'Anconia||

    What are the estimates for court and prison savings. I would say LE savings but we know that those ranks will never shrink.

    Doin' right ain't got no end.

  • Agile Cyborg||

    Sin always has a price on it, whether dollar-backed or prison-sent.

  • Hugh Akston||

    But it seems to me that prohibitionists cannot have it both ways.

    They don't want it both ways. Sabet is using the missed tax revenue projections as evidence that legalization has failed. It helps if you bear in mind that he and Pat Kennedy are mendacious assholes who will use any tendentious argument they can come up with to slow the decline of their idiotic position into total irrelevance.

  • Surly Chef||

    Next they'll propose more taxes on it to cover the revenue projection shortfall. This will help keep prices high, forestalling the death of the black market. Then they will point to the black market's continued existence as a failure of legalization, claiming that the substance, by it's very nature induces lawlessness.

  • Brett L||

    I propose an experiment. Let's lower the tax by 1/10th next year and see what direction tax revenues go. If they are up, we'll do the same until they go down, then revert. I'll bet we could have it dialed in to maximize legal, taxed purchases in 5-7 years.

  • Austrian Anarchy||

    I propose the Tic-Tac tax, see below.

  • Austrian Anarchy||

    They didn't "legalize" weed, they only re-regulated it. And the SAM guys might be intentionally correct about something, the State touted that they were going to have windfall revenues, riches beyond belief, and put into place expensive statist programs that are supposed to be paid for with those riches.

    If they would have just plain legalized it, then precious little of this would be an issue (and SAM would still be complaining, of course). If pot were legal like Tic-Tacks but purchase restricted by age, then the sales tax revenues would come and the existing bureaucracy would handle it like any other product. Instead, they turned this into a bureaucratic windfall and spent the money before receiving it. Not unlike many States handled that tobacco settlement.

    The saddest thing about all this is that after Coloradans voted to change the possession regulations, they later voted for Big Brother to crawl up their asses.

  • Rich||

    "legalization in Colorado has been characterized by children visiting hospital emergency rooms for marijuana poisonings from ‘pot cookies'"

    Just as the highway system in Colorado has been characterized by children visiting hospital emergency rooms for traumatic injuries from 'automobile accidents'.

    "I have devoted my life to mental health awareness," [said Kennedy, who] has acknowledged being treated for cocaine use during his teenage years, admitted that he abused drugs and alcohol while he was a student at Providence College, and sought treatment for an OxyContin addiction in 2006.

  • EDG reppin' LBC||

    The man certainly knows alot about drugs.

  • Raston Bot||

    He's a Kennedy. That verbiage comes pre-printed on their birth certificates.

  • ||

    "legalization in Colorado has been characterized by children visiting hospital emergency rooms for marijuana poisonings from ‘pot cookies'"

    I like how parents are simultaneously assumed to be so irresponsible that they give 'pot cookies' to their kids, but then responsible enough to immediately take them to ER.

  • Mainer2||

    That pot cookie story was fishy. She was like 3 years old, playing in her yard, unattended, on January 3 in Colorado. Isn't it kind of, you know, winter in Co ? She did test positive for THC, but the cookie was MIA. So how did they know she ingested a cookie found in the yard ?

    More likely, she got into parent's stash, and they made up the "found a pot cookie in the yard" story.

  • CE||

    Right, actually. Government roadways aren't designed to avoid crashes, because the government doesn't get sued when someone crashes on them.

  • SugarFree||

    Since the market is apt to expand as a result of legalization

    I think this is the incantation to summon the "legalization won't lead more people to try pot" weirdos.

  • Dances-with-Trolls||

    Are the mj shops there allowed to do deliveries? Back in my smoking days that was a big winner when picking dealers. I'd pay a little extra if the weed would come to the house, and might explain people sticking with black market dealers to some extent.

  • RBS||

    I usually hated going to my dealer's apartment, unless I was actually friends with the guy, I mean no, I do not feel like smoking a bowl a watching a movie.

  • CE||

    But it's Cheech and Chong!

  • RBS||

    I usually hated going to my dealer's apartment, unless I was actually friends with the guy, I mean no, I do not feel like smoking a bowl a watching a movie.

  • Raston Bot||

    Anything new on the brew front? Long Trail has a new IPA called Limbo. It's billed as PNW and Australian hops. Tastes like they dry hopped with Cascade.

  • Rich||

    Cascade dishwasher detergent?

  • Raston Bot||

    you jape.

  • William of Purple||

    Drugs are stupid, that being said it doesn't mean it should be illegal.

  • Rich||

    Exactly. If we start outlawing stupid, things will get out of hand *mighty* quick.

  • gaoxiaen||

    Most government workers would be collecting unemployment or welfare.

  • ||

    Said the square.

  • GILMORE||

    They sincerely live by the "Everything Not Mandated is Forbidden"-rule, don't they?

    Only "mandated" is understood to mean, 'providing the amount of tax-revenue we arbitrarily demand'

  • GILMORE||

    Speaking of the "Governor and his friends"-Shopping List from MJ revenue... who's griping the funds are not enough?

    "The focus of the request is on these essential areas (totals are for both fiscal years, all fund sources):
    1· Youth marijuana use prevention ($45.5 million);
    2· Substance abuse treatment ($40.4 million);
    3· Public health ($12.4 million);
    4· Regulatory oversight ($1.8 million);
    5· Law enforcement and public safety ($3.2 million); and
    6· Statewide coordination ($0.2 million).

    lemme guess

    Teachers union
    SEIU
    Cops
    Assorted bureaucrats

    because you can't have people doing something legally they were ALREADY doing illegally, without paying off a bunch of people who are already sucking as hard as possible on the public tit.

    Because really, are cops jobs *harder* now that people aren't dealing drugs on street corners?

  • UnCivilServant||

    Because really, are cops jobs *harder* now that people aren't dealing drugs on street corners?

    Yes, now they have to do real work to meet their quotas.

  • The Late P Brooks||

    What are the odds Kennedy and those other vultures are in line for a slice of that tribute, to provide "counseling" and other court mandated services?

    "WE HATESS TEH DRUGS, BUT WANT A SHARE OF THE PROFITS."

  • Mainer2||

    Follow the money.
    If that's not an iron law, it should be.

  • Mainer2||

    Hickenlooper ?
    More like Dickinpooper.

    /immature

  • mad libertarian guy||

    Either way, the prohibitionists can't lose

    They have already lost. This bullshit is just the death throes of pro-incarceration ass fucks. Fuck them and fuck their arguments.

  • Dread Pirate Roberts||

    Everyone knows that the penalty for doing drugs is to have daddy call the judge, get you sent to an expensive rehab clinic, then get you elected to Congress based your last name.

  • Mainer2||

    And my wife wonders why I despise the kennedys.

  • CE||

    And Bushes. And Clintons. And Obamas.

  • CE||

    Gee, you mean to tell me that people are still opting to buy black-market product when the legal stuff has a mere 27.9 percent sales tax attached to it?

    Next you'll try to tell me that the cover of a legal market makes them feel safe doing so.

  • Capo||

    It's also pretty freaking cold in Colorado right now, which has got to be holding down sales...at least to tourists.

  • Duelles||

    Why not have it both ways? They don't like the legal pot and they don't like sin taxes. I'm fairly simple minded about this. Is there a possibility that black market entrepreneurs will begin selling (more) dangerous drugs to fill in their illegal income gap. We always say the market hates a vacuum.

  • RishJoMo||

    lol, sounds good to me dude.

    www.Anon-Works.com

  • Michael S. Langston||

    How do people today define market failure?

    If the market isn't doing what I think it should be doing - market failure!

    & this is yet another example of market failure.

    The proof just keeps piling up... and all you libertarians and other misc evil people do is sit around smoking pot and voting Republican. Tebaggers each and every one.

    For shame on you all for rejecting good, common sense governance, all in support of guns and weed, and keep the gays, blacks, and women back in the 18th century.

    History will not forgive the active sabotage your group plays every day with your negative pronouncements about Obama.

    All of which are just lies BTW - retold and retold by the likes of Faux News, RusHitler, PalIngorant, that GooseStepper-Beck, or one of those other minions of evil.

    Indeed, if there is any justice, and if it includes a hell, there will be a special place reserved for people like you all - those that have your special brand of racist, bigoted, irrational nutwing psychotic hatred of Mr. Obama - who is without question our greatest president ever.

    /progressive

  • gaoxiaen||

    WTF are you talking about? That post could be a Bob Dylan song.

  • gaoxiaen||

    You know, heads I win, tails you lose.

  • taker||

    At $10 a gram I'm not a buyer. I'm a grower, at least for personal consumption. If I can grow tomatoes, I'm sure I can figure out how to grow a weed.

  • ||

    I don't know why we should be baffled by their stance. It's hard to deny there were a substantial number of voters who supported the law primarily because of the promise of big tax revenues. If the tax revenues don't measure up to their projections, they can use this against future legalization initiatives to try to convince those who aren't fans of marijuana who might have voted for it on the promise of additional tax revenue to change their mind.

    That said, the sample size is too small and conditional to project long-term revenues at this point, but don't be surprised if they stretch the "below projection revenues" as far as they can politically.

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