In its first year, recreational marijuana builds on growth model
Colorado marked its first full year of storefront marijuana sales in January, during which it established a regulatory model for production, cultivation, product manufacturing and retail sales.
Amendment 64 went into effect on Dec. 10, 2012, expanding legal marijuana possession to anyone 21 and older, of up to one ounce for any purpose. Close to a year later — Jan. 1, 2014 — the first legal marijuana sales took place in Colorado, not just to those with medical marijuana licenses, but to anyone 21 and older with an ID.
Since, professions in and around the marijuana industry have proliferated. They include edibles, even those for celiac patients and gluten-sensitive diets; concentrate processors; scientific researchers (16 marijuana testing facilities were licensed in the state at the end of 2014), strain reviewers; pot-focused real estate agents; organic and indoor farmers; container manufacturers; travel agents; trimmers and bud-tenders; security guards; and legal advisers.
Here’s a look at the taxes, licensing, sales and medical research that took place in Colorado’s first year of legal retail marijuana:
In 2014, the state collected roughly $53 million in tax revenue, licenses and fees for both medical and retail marijuana. For the first five months of 2015 alone, state revenue from those sources totaled $50 million, according to the Colorado Department of Revenue.
Taxes on recreational marijuana sales add up to 28 percent: the standard 2.9 percent sales tax, an extra 10 percent sales tax, plus a 15-percent excise tax for wholesale purchases when marijuana is sold from a cultivator to a storefront, product manufacturer or another cultivation facility. The excise tax is almost entirely funneled to public schools via the Public School Capital Construction Assistance Fund Transfer, which has generated almost $24 million since January 2014.
Medical marijuana, on the other hand, is only subject to the 2.9 percent sales tax.
“We haven’t seen any drop in the number of medical marijuana patients, but if you have such a price difference it could be an incentive to maintain use on the medical marijuana side,” said Dr. Larry Wolk, executive director and chief medical officer of the Colorado Department of Public Health and Environment.
In addition to the tax disparity, medical and recreational marijuana have a couple of other differences that can be confusing for consumers, policy makers and law enforcers. The legal age for medical programs is 18 years old, whereas the recreational limit is age 21. Medical marijuana patients can possess up to 2 ounces, compared to 1-ounce for recreational users. The state’s mandate for marijuana lab testing – which measures for contamination and THC levels and ensures proper labeling – applies to over-the-counter products, but not to medical. The medical regulations were written in 2010, before recreational legalization, and reflect a time when only a handful of testing facilities were in Colorado.
“We would like to see the harmonization of the two programs, so that there’s not so much discrepancy or confusion between the legalized and medical programs as it relates to the products, rules and regulations,” Wolk said.
Between the industry’s medical marijuana centers and retail marijuana stores, about 148,000 pounds of pot were sold to consumers in 2014, according to the Colorado Department of Revenue. Retail dispensaries accounted for 39,000 pounds, about 26 percent of total sales. Medicinal sales were nearly three times as high, totaling 109,578 pounds in 2014.
Voter-approved retail marijuana does not require every jurisdiction to comply. More than 70 percent of Colorado’s 321 local jurisdictions prohibit medical and retail licenses, and only 67 allow both. Five allow only retail marijuana and 21 allow only medical-based sales.
The number of licensed medical marijuana businesses varied only slightly from the beginning of 2014 to year’s end. December ended with 1,416 licenses, just 81 more than the number in January.
Retail marijuana establishments – retail stores, cultivators, product manufacturers and testing facilities – presented fresh market opportunities and increased from 399 total licenses to 833 by the end of 2014. Of those, 322 are retail stores. Statewide, 77 license applications were denied. Meanwhile, total licensed facilities increased from 1,734 to 2,249 during 2014.
As of February 2015, a total of $9 million in funding had been approved for medical grants, doled out by the Medical Marijuana Research Grant Program. The Medical Marijuana Scientific Advisory Council – established by the Colorado Department of Public Health and Environment in May 2014 – provides the scientific and policy guidance for the program.
The nine medical studies currently funded range from testing marijuana for sleep – a $450,000 grant awarded to National Jewish Health to examine the efficacy, safety and usage patterns – to a $2.15 million grant to examine the medical use of marijuana for veterans with chronic, treatment-resistant post traumatic stress disorder (PTSD), which was issued to the University of Pennsylvania and VA National Center.
“We’re trying to invest in research as it relates to effectiveness of medical marijuana, and from a pragmatic viewpoint, we were hoping to have post traumatic stress disorder added for a qualifying condition,” Wolk said in light of the Colorado Board of Health’s 6-2 vote in July to not add PTSD to the list of conditions that can be treated by medical marijuana.
In May, Gov. John Hickenlooper signed Senate Bill 14, to discourage the improper use and sale of the lesser-taxed medical marijuana. Under the law, growers are limited to 99 plants. To grow more, they must register as commercial growers, subject to licensing fees and background checks of retail operations. cb
BY THE NUMBERS
Medical marijuana-infused edible items sold
Non-injested medical marijuana-infused products sold, such as lotions, salves and patches
Plants cultivated each month
Edible retail marijuana-infused products sold
Non-edible recreational marijuana-infused products sold
Plants cultivated in January 2014, the first month of legalization, which increased by December to an average of 216,000 plants cultivated each month
*Source: Colorado Department of Revenue