High On Tax Revenue

Colorado is set to become the first state to regulate and tax the recreational use of marijuana.  Don’t expect it to be the last.

The Colorado legislature has passed a series of bills dealing with marijuana.  In the wake of a 2012 voter initiative that approved recreational use of marijuana by people over 21, the legislature has decreed how many marijuana plants people can grow for their personal use (no more than 6), how much marijuana visitors to Colorado can buy (a quarter ounce), and how marijuana offered for sale must be packaged (in child-proof containers that specify potency).

As far as taxes are concerned, Colorado ganja will be subject to a 10 percent sales tax and a 15 percent excise tax.  In other states where the sale of “medical marijuana” is taxed, significant revenues have been obtained; in California, $100 million is raised annually from such taxes.

We can expect other states to follow Colorado’s lead, for entirely predictable reasons.  States need cash, and that means they need things to tax.  Through “medical marijuana” exceptions, the use of recreational drugs has become increasingly accepted by Americans — and that use is largely untaxed.  With Colorado, and Washington, and other states taking the lead, what state legislator who’d like to have a bit more revenue to spread around to his pet programs can resist a marijuana tax?  At all levels of government our politicians are addicted to taxes, and this is another way for them to get their fix.