Colorado is lighting up its record books, as the tax revenue that the state is receiving from legalized marijuana is blazing almost as fast as the smokable drug responsible for the increase.
The numbers indicate that the tax revenue received by the state during this year’s summer was more than double that of last year and fully exceeded projections.
During the first seven months of 2015 the state of Colorado has taken in $73.5 million. At the current rate, Colorado will collect over $125 million in tax revenues by the end of the year.
Expectations fell short in 2014, as experts estimated that legalized marijuana would bring in around $70 million. However, the state was only able to collect $44 million in marijuana taxes, as sales totals did not meet the expectations of analysts.
This year is a different story, as tax revenue from marijuana sales is greatly exceeding expectations.
People involved in the marijuana industry believe that the sales boom might be caused by an increase in social acceptance.
President of the Colorado Cannabis Chamber of Commerce Tyler Henson said, “I attribute it to more and more people (being) comfortable with the legalization of marijuana. They don’t see it as something that’s bad for them.”
Tim Cullen, CEO of Colorado Harvest Company, said “People who would never have considered pot before are now popping their heads in.”
The Colorado Harvest Company runs three marijuana dispensaries in the Denver area, and they plan to have a fourth in the near future. According to Cullen, sales in his stores have experienced a monthly growth rate from 8% to 12% nearly every month this year. Most of the sales come from Colorado residents who are buying recreational marijuana.
Marijuana has been embraced by Colorado since becoming legalized. A poll that took place in February showed that 58% of Colorado citizens supported keeping marijuana legal, while 38% opposed the idea.
Another factor that might help explain the increase of marijuana sales over the past year is the fact that the number of dispensaries selling marijuana has increased. When the retail sale of marijuana began in January 2014, the only stores that were allowed to sell recreational marijuana were those with licenses for medical marijuana. Over time, more stores have opened, and now there are hundreds of dispensaries across the state.
With the increased number of dispensaries, sellers of marijuana have had to work hard to attract customers. The average marijuana customer is a far cry from the young college-aged stoner stereotype. Today, the typical cannabis connoisseur is more sophisticated and looking for specific marijuana strains. In other words, the average customer is a middle-aged business professional with disposable income.
Many shoppers say that purchasing marijuana in dispensary today is a similar experience to that of a fine wine shop. Workers recommend particular varieties of marijuana based on the customer’s needs. Marijuana lingo is usually common place, as customers will likely hear about the various aspects of a strain, including its “aromatic notes”. Dispensaries have also been known to utilize practices such as weekly promotions and loyalty programs.
The increase in marijuana sales can also likely be attributed to tourists visiting the Centennial State. During 2014 Colorado’s 71.3 million visitors spent a record $18.6 billion in Colorado. Coincidentally, this was also the first year of marijuana legalization. 2015 tourist sales have not yet been released.
However, certain aspects are holding back the marijuana industry. Aspiring dispensary operators face a lack of access to credit cards and bank loans. They are also unable to receive certain federal small business deductions. Furthermore, the marijuana industry cannot openly advertise the way that liquor companies are able to.
Despite the challenges, sales for cannabis are expected to increase, as marijuana continually becomes more socially acceptable.