The Equity Factor

Denver Stands to Make Millions from Legalized Marijuana

In the capital of the state that just legalized marijuana, the new weed economy is expected to bring in $3.4 million in tax revenues in its first fiscal year, and $7.5 million in the second. So there, David Brooks.

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Erstwhile weed smoker and New York Times columnist David Brooks has spoken. “For a little while in my teenage years, my friends and I smoked marijuana,” he wrote in the Grey Lady this morning. But these days Brooks, who has “fond memories” of his “moments of uninhibited frolic” as a stoner, is not a fan of new laws legalizing marijuana in Colorado and Washington, which he says are in the “business of effectively encouraging drug use.”

What Brooks neglected to mention is that they’re also in the business of effectively increasing state and local tax bases.

Denver City Council President Mary Beth Susman, who wrote her 1972 master’s thesis on the social and psychological effects of pot, told Bloomberg News that Denver officials expect the new pot economy to bring in $3.4 million in tax revenues in the first fiscal year, and around $7.5 million in the second year.

And that’s just Denver. The Legislative Council of the Colorado General Assembly has projected $67 million in tax revenues, 85 percent of which will go into state coffers and the other 15 percent to local governments.

“Education and enforcement primarily is what we will first spend it on,” Susman told Bloomberg. “And then it’ll be in our general fund and we can use it for other purposes as well.”

Cities stand to benefit from regulating weed sales. Zak Stone’s Forefront story from last week explored the world of medical marijuana dispensaries and found that Oakland, Calif. has had more success in the pot business than Los Angeles. Why? Stronger regulations, most likely:

For all the dispensaries, raids and headaches, L.A. has not seen the windfall that many predicted. In 2012, the city’s several hundred dispensaries paid just $2.5 million in taxes. Compare that to the $1.4 million that Oakland, with one-tenth the population of Los Angeles, captured from its four dispensaries in 2011, and it’s clear that strict regulation pays off. (That doesn’t even include taxes from other weed-oriented businesses from bakeries to web start-ups, not to mention the cost savings from reducing expensive court cases and police raids.)

Strong regulation and enforcement, which according to Susman is where the initial tax revenues will go, stand to make the business more robust. With that comes more tax revenue for the general fund, which can go toward everything from education to affordable housing. Just don’t tell David Brooks.

The Equity Factor is made possible with the support of the Surdna Foundation.

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Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.

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Tags: economic developmentequity factorhealthcaredenvermarijuana

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