It looks like Colorado got more than it bargained for with the legalization of recreational marijuana use.
No, crime rates haven’t skyrocketed and the children haven’t dropped out of school en masse as sensationalist propaganda would have you believe. On the contrary, it looks like the biggest problem the State of Colorado is facing after legalizing recreational marijuana use is that it is making too much money.
Simply put, the state constitution limits how much tax money the state can take in before it has to start giving some of it back. Meaning that, with overall tax revenue up as the result of an improving economy and other tax collections growing faster, in conjunction with the surplus of tax revenue generated by the addition of taxed marijuana sales, Coloradans might be seeing their own share of the estimated $50 million that was raised in marijuana taxes in 2014, the first year in which marijuana was legal.
That could mean as much as $30.5 million in marijuana tax refunds, translating to about $7.63 per adult in Colorado. While the per-person refund is negligible, it is creating quite a headache for lawmakers who now have to decide if and how to dole out these refunds and to whom. (For example, should the refunds be issued to all taxpayers, or just those who purchased marijuana?)
Ironically, this is not necessarily welcome news to Colorado residents, who specifically voted for legislation that would legalize marijuana with the understanding that taxes earned from marijuana sales would go to the state and schools.
State officials are scrambling to find a way to circumvent refunding tax dollars earned from marijuana sales, which could possibly include a third marijuana-related ballot that would this time ask voters to exempt marijuana taxes from the refund requirement.
According to the Associated Press, “Lawmakers seem confident that the refund mechanism won’t matter because voters would approve pot taxes a third time if asked.”
The same AP article quotes Republican Senate President Bill Cadman as saying, “I think it’s appropriate that we keep the money for marijuana that the voters said that we should,” noting that his party opposes keeping other refunds based on the Taxpayers’ Bill of Rights but favors a special ballot question on pot taxes.
Still, a state having to manage a surplus of tax revenue is not such a bad problem to have, nor is having both Republicans and Democrats agreeing on a tax issue for once.