The United States has a problem. Many states are cash poor and are struggling to find new sources of revenue not detrimental to the environment and which create jobs. Colorado, however, has the solution to this problem and it is called marijuana.
During 2014, Colorado generated $700 million in revenue from marijuana ($385.9 million from medical and $313.2 million from recreational), however, those numbers will be nothing compared to what the state generates during 2015.
Triple digit growth
The Colorado Department of Revenue reported that Colorado generated $8.9 million in tax revenue from the sale of marijuana in March ($9.9 million in taxes when you include all marijuana taxes and fees). In March 2014, Colorado generated $4 million in tax revenue. This represents over 100% growth!
During 2015, the Public School Capital Construction fund has received $12 million from marijuana sales taxes. The fund got a $2.5 million boost from marijuana sales taxes during March.
Colorado’s fiscal year starts on July 1st and goes through June 30th. During this fiscal year, Colorado has generated $68 million in sales taxes from marijuana, up from $16 million during recreational marijuana’s first fiscal year. These numbers, however, do not serve as a good comparison because of the growth of the industry (from a number of a dispensaries perspective), as well as due to the time period measured.
Year over year first quarter comparison
During the first quarter 2015, Colorado generated $24.5 million in tax revenue from the sale of medical and recreational marijuana. After accounting for all marijuana taxes and fees, the state generated $27.8 million in tax revenue during the first quarter!
The state’s 2015 numbers show incremental growth compared to the first quarter of 2014. During the first quarter of 2014, Colorado generated $10.2 million in tax revenue from the sale of medical and recreational marijuana. After accounting for all marijuana taxes and fees, Colorado generated $12.5 million in tax revenue during the first quarter.
An industry in its infancy
The Colorado cannabis industry is in its infancy. The industry is in the first inning of what will be a multi decade growth cycle. Our analysts expect these numbers to continue increase year over year as the market develops and new businesses open.
It is important to note that these numbers only take into account the actual sale of marijuana and do not account for the revenue generated by ancillary businesses such as grow lights, soil, vaporizers, security equipment, and other products and/or services. These businesses saw the demand for their products skyrocket during 2014.
We expect to see Colorado continue to generate more revenue during 2015 due to the increased number of dispensaries operating in the state. Our analysts found that the number of dispensaries is one of the primary drivers of revenue growth for the legal marijuana industry.
In January 2014, there were only 30-40 recreational marijuana dispensaries open in Colorado. In December 2014, there were more than 300 recreational marijuana dispensaries open. Colorado’s numbers will continue to increase at exponential rates until the dispensary growth rate flatten. This is something that we do not expect to happen for some time.