Marijuana Is Bringing In More Tax Revenue Than Alcohol

When it was first implemented in 2014, the legalization of marijuana for recreational sale and use in the state of Colorado was at the center of a lot of controversy. The two camps – one in support of it and the other against it; each had different arguments which ranged from the physical and social effects, to revenue generation and business opportunities.

However, the taxes generated as a result of the controlled sale of marijuana across the state are far from contentious and have begun a whole new set of discussions since the figures were published by The Colorado Department of Revenue at the end of the fiscal year for 2014 – 2015.

Colorado made history as the first state ever to generate more tax from marijuana than alcohol. The difference in tax profits between the two is quite wide, with alcohol generating less than $42 million in taxes, whereas marijuana brought in almost $70 million in the same year.

Factors that Contributed

There are a number of factors that may be responsible for the higher tax profits in the sale of marijuana than alcohol.

Firstly, marijuana is taxed much more heavily than alcohol. The tax has 3 tiers:  the usual 2.9 percent sales tax, but then an additional 10 percent extra sales tax, and a further 15 percent excise tax are added on top. This very quickly adds up, helping to pad out the public purse. When you compare this to a tax of only 8 cents per gallon on beer, it is clear that a lot more tax money could be generated from the sale of weed.

Also, there is a lot more money being spent on marijuana by users in comparison to alcohol, which is average of more than four times the amount over the course of a year, according to research by Marijuana Business Daily. Add this with the fact that 57 percent of recreational users smoke weed every day, and you can see how the profits might begin to increase.

As a result of this thriving success, Denver, the state capital, now has more cannabis dispensaries than it does Starbucks and McDonald’s outlets.


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