During Colorado’s 2022-23 fiscal year, the state collected more sales tax revenue from cannabis than it did from both cigarettes and alcohol, according to a new report from the Colorado General Assembly. In fact, weed tax revenue brought in almost as much as the other two vice taxes combined. Together, cigarette and alcohol taxes totaled $290 million, while cannabis raked in $282.3 million.
Marijuana does have an edge when it comes to raising sales tax revenue. While cigarettes and alcohol are both taxed at just 2.9%, cannabis has a 15% retail sales tax. But this is the second fiscal year that pot sales taxes have outpaced that of alcohol and cigarettes.
Research published in Clinical Toxicology in December 2022 and a recent Gallup poll suggest this flip could indicate a preference shift away from traditional intoxicants and towards cannabis.
The peer-reviewed study from the journal Clinical Toxicologytracked intentional use reported to the National Poison Data System (NPDS) from 2000 to 2020. The researchers found 338,000 instances of intentional abuse or misuse among American children aged 6-18 during that time period and “an upward trend in marijuana misuse/abuse exposures among youth, especially those involving edible products.”
That study found a 245% increase in adolescent cannabis use since 2000. Over that same period, the research found that alcohol misuse and abuse had steadily declined.
A Gallup poll from August 2023 found that younger adults view alcohol as less harmful than tobacco and more harmful than cannabis. The same poll shows that 39% of Americans now believe that consuming one to two drinks a day is bad for one’s health.
“The increased belief that moderate alcohol consumption is detrimental is owed largely to young adults aged 18-34, among whom it has risen 18 points since 2018,” the firm’s analysis states. “That compares with a 13-point increase among middle-aged adults and virtually no change among those 55 and older.”
Gallup also notes that cigarette use among U.S. adults continues to decline. Now, only one in eight Americans smokes them, Gallup says. Of all three substances, cannabis garnered the lowest level of health concern among users.
Colorado’s tax revenues might be starting to reflect these observed changes too. For the second year in a row, cannabis tax revenue is outpacing that of alcohol and cigarettes. Higher tax rates aside, that may indicate that more people are choosing to use cannabis over alcohol and cigarettes.
That could be a good thing for the state’s general health. Cannabis is decidedly less toxic than the other two vices. It’s a largely non-addictive, natural intoxicant that is almost impossible to overdose on. Alcohol and cigarettes, by comparison, kill hundreds of thousands of people every year. According to the National Institute on Alcohol Abuse and Alcoholism, more than 140,000 Americans die from alcohol-related causes annually. And according to the Centers for Disease Control, over 480,000 Americans die annually from cigarette smoking.
The case could certainly be made that smoking is harmful no matter how it’s done. However, the research published in Clinical Toxicology showed that edible marijuana use had the highest monthly increases among 13-16-year-olds year-over-year. So even among underage marijuana users, the trend leans toward the healthiest (and most discreet) form of ingestion.
As those teenagers continue to age into adulthood, and as more states legalize cannabis, it’s likely this 20-year trend reported in Clinical Toxicology will continue — which means that cannabis sales tax revenue in Colorado could continue to outpace alcohol and cigarettes in years to come. And because cannabis is taxed at such a high rate comparatively, that would mean greater revenue for the state.
The most recent Colorado General Assembly report outlines the state programs and initiatives cannabis tax revenue goes toward: Just over 2% ($6.2 million) goes to the State Public School fund; 10% ($28.2 million) is distributed to local counties and municipalities; 15% goes toward the Marijuana Tax Fund (which funds 16 different state agencies); a portion is allocated to the Building Excellent Schools Today (BEST) Act, and another portion is earmarked for the general fund.
Pueblo County even has a college scholarship program funded by local cannabis sales tax revenue (Weed Between the Lines, “Sin tax scholarships”, March 30, 2023).
The fact that cannabis sales taxes have outpaced those of alcohol and cigarettes for the last two years seems to reflect a shift in young people’s preferences and perceptions of these substances. And if that trend continues, Colorado’s ability to fund its public programs through cannabis should continue to grow as well.
