Not everyone is open to the legalization of marijuana use, recreational or otherwise. While US states have varying degrees of legality (from complete bans to legal medical use to all legal uses), cannabis use and possession is still prohibited by federal law under the Controlled Substances Act of 1970.
Conversations about whether marijuana use should be legal nationwide are complicated. Why are cannabinoid prescriptions approved by the FDA? Do we know enough about the effects of cannabis to call it safe? What about our kids? What about a history of discrimination? What about people for whom no other treatment works? What about impaired driving?
A number of American states have decided to sort out the big questions through experience. And while opening the door to legal cannabis use, they’ve discovered ways to use it to benefit their communities. Tax revenue from cannabis use diverts dollars from the dealer next door into a larger pot (pun intended), into which millions of people can dip.
Several cities and towns in Colorado, for example, have found creative ways to use marijuana sales tax dollars for good.
Aurora, Colorado Uses Marijuana Taxes to Help the Homeless
Aurora, Colorado rolled out no more than 24 recreational cannabis retail stores since legalization. But a special marijuana sales tax from just those two dozen stores generated over $27 million from 2014 to 2018. The majority of those tax dollars were set aside to provide holistic resources for people without stable housing.
As of 2018, $7.3 million had already been spent to create services for the homeless, new affordable housing, vehicles for non-profit groups, and a day resource center at Anschutz Medical Campus.
More recently, the Aurora Central Recreation Center opened its doors at the beginning of summer 2019. It’s the city’s first new recreational center in almost four decades, and it provides a space for community members to access a variety of services. Cooking classes, swimming lessons, meeting room spaces, and fitness equipment are now all available to Aurora residents, thanks to a financial boost from recreational marijuana.
Parachute has invested in community basketball court upgrades, a new boat ramp, and new campgrounds.
Denver has fixed roads that were in poor condition, improved community parks, established opioid abuse intervention programs, and invested in new affordable housing.
“I’ve only thought the revenue should be used for a social good — like affordable housing or homelessness,” said Kendra Black, who chairs a council committee focused on marijuana issues. “Something where the residents of Denver can see that this sin tax is going to fund a community good.”
Marijuana Sales Taxes Around the World
It’s been almost 1 full year since Canada legalized recreational cannabis possession and use on a federal level. Provincial and territorial governments are responsible for regulating sales, either through online stores or brick-and-mortar locations.
Early figures show a significant boost from marijuana sales taxes. From October of 2018 to March of 2019 alone, provincial and federal governments saw a combined $186 million in tax revenue, in spite of tax rates being fairly low.
But Canadian politicians say they are more concerned about keeping citizens away from street drugs rather than making a profit. “My approach is to make sure that the taxation of cannabis is consistent with the goal of keeping cannabis out of the hands of kids and out of the black market,” federal Finance Minister Bill Morneau told the House of Commons. “That means keeping the taxes low so we can actually get rid of the criminals in the system.”
Uruguay, which is currently the only other country that has completely legalized cannabis use, had a similar perspective in 2014. “The principal objective is not tax collection. Everything has to be geared toward undercutting the black market,” said Felix Abadi, who worked to develop the country’s marijuana tax structure. “So we have to make sure the price is low.”