Colorado's Cash Crop - James Leung

James Leung

Freshman Composition

May 18, 2015

Colorado’s Cash Crop

            Marijuana and its legality in the United States has become a very hot topic in recent decades.  Medical marijuana has been legalized in several states, such as California, for almost two decades now.  But, the legalized recreational usage of marijuana has occurred in a few states, including Washington, Oregon, Alaska, and Colorado, only recently in the past 3 years.  In Colorado specifically, voters first legalized recreational use of cannabis in November 2012 and retail stores selling the drug first opened in January 2014.  The measure was known as Colorado Amendment 64 and it allowed for the recreational use, cultivation, and commercial sale of marijuana.  The amendment was the first of its kind and immediately caused controversy.

            The overall opinion on the legalization of marijuana in Colorado is mixed: local businesses and the state support the idea and surrounding states such as Nebraska oppose the legalization in its neighboring state.  The opinions on Colorado’s legalization of marijuana are likely linked to the economic impacts legalization has had on the various parties.  Economically, the legalization of marijuana in Colorado appears to have benefited small communities in Colorado, allowed for the state to increase revenue by a small margin, and harm the surrounding states.

            Local communities and small businesses have become financial beneficiaries as a result of the legalization of marijuana in Colorado.  The economic effect that legalized recreational marijuana had on the citizens of Colorado was immediate.  According to Katie Lobosco of CNNMoney, legalization of recreational marijuana blew up the cannabis related job market in Colorado.  She emphasizes that more than 160 businesses being licensed to sell recreational weed from January 1, 2014 to March 13, 2014.  In the span of only three months, legalized cannabis helped create hundreds of jobs in Colorado.  The increasingly competitive job market nationwide makes finding jobs for Americans tougher day by day, therefore the economic relief that legalized marijuana generates through job creation is a positive outcome legalization brought to residents throughout Colorado.  Furthermore, according to Daniel Wallis of Reuters, “In its first annual report, the Colorado Department of Revenue's Marijuana Enforcement Division said... 322 retail stores were licensed at the end of last year, up from about 200 six months earlier, while 833 licenses were issued to retail businesses in general.”  The growth of marijuana businesses being licensed from the time of Lobosco’s report to Wallis’ shows a clear sign that economically, the citizens of Colorado have benefited from the legalization of the drug in Colorado.  However, job creation is not the only way legalizing the drug benefited local communities; tourism has also been boosted by legalized marijuana.

            Tourism in Colorado increased due to the legalization of recreational marijuana.  Currently, Colorado is one of only four states in the US that legally allows the smoking and consumption of marijuana.  Legalized marijuana created a large boom in Colorado’s touristry.  As reported by Julie Weed of Forbes, “Hotels.com found that Denver hotel searches went up 73% compared to the year before, for the Marijuana festival weekend of April 2014, the first to be held following legalization of marijuana sales.”  The rise in tourism is a positive impact for all of the stores in Colorado that sell marijuana related products.  But, not only are those stores affected other businesses in the towns that the stores are in, economically benefiting from the tourism as well.  Marijuana attracted tourists to visit Colorado and since tourists needed a place to stay in Colorado, the hotel business profited too.  

            Moreover, a significant portion of sales of some marijuana businesses come directly from tourists.  As reported by Aaron Smith of CNMoney, “the Terrapin Care Station recreational dispensary gets at least of third of its income from out of state, according to manager Jarrod Guaderrama.  ‘I can definitely tell that all the people from Texas, Georgia, California made this their vacation spot because of legal marijuana,’ he said.”  It is evident that tourism contributes a substantial amount of money to stores just like Guaderrama.  Colorado is receiving tourists arriving all the way from Georgia.  Most people traveling across the country would not just stop and only purchase marijuana; they would also browse around the town and spend money in other places such as restaurants.  Local businesses can only prosper from the tourist contribution marijuana brings to Colorado.  The state of Colorado itself prospered from marijuana legalization too, however the money gained by the state was at a lesser extent than the local communities.

            Although Colorado expected the legalization of cannabis to generate large tax revenue for the state, the actual profits that resulted were minuscule compared to the expectations.  At first Colorado predicted ample tax earnings as shown by Governor of Colorado John Hickenlooper, when he stated “As of February 20, 2014, our budget office is projecting that the state will collect about $134 million in taxes from medical and recreational marijuana sales in fiscal year 2014-2015.”  $134 million is a lot of money, especially when it is money that Colorado would not have if marijuana was still illegal.  This projection comes directly from Governor Hickenlooper and that means the state fully believed marijuana would generate that much money for Colorado.

            And Colorado had sufficient reasoning to believe in their high projections.  In terms of taxes, “about $2,000,000 in revenue was generated in the first month of retail cannabis sales alone” (Blake and Jack 373).  Two million dollars is more money than many people will ever see in their lifetime and Colorado gained that amount of money in only one month due to taxation on recreational marijuana.  With projections so high and actual positive results to support those predictions, there was little to believe recreational marijuana was not going to be a large source of income for Colorado.  But sometimes other factors, such as decrease in demand or budget costs, will negate the large sums of money gathered.

            To say that the $139 million projection was too excessive is beyond an understatement.  Within seven months of the first projection, the Governor's office changed the prediction to about $69 million.  Furthermore, the profits generated by recreational marijuana took a hit after $40 million of the money raised was dedicated to building and improving schools in Colorado. Josh Barro of the New York Times said, “In practice, Colorado is likely to receive just $20 million from that tax this year.”  To Colorado, $20 million is a disappointing and unsatisfactory amount of earnings for marijuana which the state expected to be high.  Compared to the local communities and businesses in Colorado, the state itself did not benefit as much economically from marijuana legalization.  With a state budget of $27 billion, the $20 million barely puts a dent into mitigating the budget. However, Colorado’s economy did improve in another way that was not conventional tax revenue.

             Legalization of marijuana sale and consumption alleviated police resources from being used on marijuana related crimes.  Marijuana laws have been subject to scrutiny in recent years due to many Americans questioning their necessity.  As a matter of fact a poll by Oaksterdam University “found that a massive 72% of Americans agreed that ‘government efforts to enforce marijuana laws cost more than they are worth’” (Pedersen 353).  Prior to legalization of marijuana, police had to spend time and money regulating and enforcing laws against the drug.  This time and money could have been spent in other issues and crimes such as robberies and murders.  Eventually, there was enough evidence to support marijuana’s positive influence on crime in Colorado.  And, “despite some critics' fears of a pot-driven crime explosion, Denver police say burglaries and robberies were down by between 4 and 5 percent in the first four months of [2014]” (Wallis).  While it cannot be said that decriminalization of marijuana directly caused crime rates to decrease, at the same time, it cannot be said marijuana caused crime to increase because crime went down.  Tax payer money that went into Colorado’s police forces was saved due to marijuana’s legalization.  But, legalization of marijuana proved to be a double–edged sword.

            Albeit crime rates in Colorado decreased after the drug was legalized, crime rates in neighboring states increased.  In the states surrounding Colorado, recreational marijuana is illegal and the cross-state possession from Colorado to another state is prohibited by law.  Eventually, the issue escalated so dramatically that Nebraska and Oklahoma filed a lawsuit against Colorado for legalization of marijuana.  According to the lawsuit,  “ ‘Marijuana flows… into neighboring states, undermining plaintiff states' own marijuana bans, draining their treasuries, and placing stress on their criminal justice systems’ ”(Hughes).  For states such as Nebraska and Oklahoma, Colorado’s legalization of marijuana wasted money trying to control and cease drug trafficking from Colorado.  This extra effort in regulating marijuana directly affects those states’ economies and funds in a negative manner.  Not to mention the finances and assets being spent filing the lawsuit by the two states.  The legal battle against Colorado because of marijuana will cause collateral damage to the resources of Nebraska and Oklahoma.  Additionally, legalization of marijuana in Colorado is stealing wealthy citizens from other states.

            Citizens of other states are leaving their home states in order to get into Colorado’s marijuana business.  Since legal marijuana is a very new business, there is not a large portion of the American population involved in it.  Also due to the lack of legalization in states around Colorado, investors and businessmen are seeking to get their stakes in own the growing business.  According to a report by CBS local new in Dallas, “Samuel Choo, is a Dallas entrepreneur, who says he is selling his house and leaving Texas with his life partner. Together, they hope to make it big in Colorado’s pot industry.”  These are not simply regular everyday Americans leaving Texas; these are some of Texas’ most affluent residents.  The migration of Texas’ wealthiest to Colorado is definitely a negative result of legalized marijuana for Texas.  As a result of Texas’ wealthy businessmen leaving for Colorado, Texas’ taxpayer revenue also leaves for Colorado.  Colorado’s marijuana legalization is draining and diminishing other states’ economies.  There is no monetary gain for Colorado’s neighboring states, only harm is done.

            Colorado is in an experimental state with marijuana currently.  In other words, while a lot of evidence and statistics concerning the financial impacts legalization of marijuana in Colorado has been collected,  the legalization is so recent that nothing can be concluded as of yet.  Numerous factors can change the outcomes of how legalized marijuana impacts local communities, the state of Colorado itself, and neighboring states.  These factors can include change in supply and demand of marijuana and legalization of marijuana in other US states.  So far it seems that local communities have profited most, Colorado state has benefited to some extent, and other states have been damaged by legalization.  But these results can very well change in the next few years.  Only time will show truly how marijuana legalization has impacted all three parties.

            The results of marijuana legalization in Colorado will be consequential to the future of the drug throughout the United States.  The fate of not just recreational but also medical marijuana will be influenced by how valuable or invaluable the drug is to all parties involved.  All states will carefully watch the aftermath of legalization in Colorado to decide if they should implement similar decriminalization policies as well.

Works Cited

Smith, Aaron. "Tourists Flock to Colorado to Smoke Legal Weed." CNNMoney. Cable News Network, 22 Aug. 2014. Web. 10 May 2015.

Barro, Josh. "Marijuana Taxes Won’t Save State Budgets." The New York Times. The New York Times, 08 Apr. 2015. Web. 11 May 2015.

Blake, David, and Jack Finlaw. "Marijuana Legalization in Colorado: Learned Lessons." Harvard Law & Policy Review 8.2 (2014): 359-80. Academic Search Complete [EBSCO]. Web. 6 May 2015.

Hickenlooper, John W. "Experimenting with Pot: The State of Colorado's Legalization of Marijuana." Milbank Quarterly 92.2 (2014): 243-49. CINAHL [EBSCO]. Web. 6 May 2015.

Hughes, Trevor. "Colorado Sued by Neighboring States over Legal Pot." USA Today. Gannett, 18 Dec. 2014. Web. 10 May 2015.

Pedersen, Willy. "The Powerful Mix of Capital and Cannabis Culture." Addiction 109.3 (2014): 352-53. CINAHL [EBSCO]. Web. 6 May 2015.

"Texans Fleeing For Colorado To Cash In On Pot Rush." CBS Dallas Fort Worth. CBS Local Media, 21 Apr. 2015. Web. 10 May 2015.

Wallis, Daniel. "Colorado Sold 17 Tons of Retail Marijuana in First Legal Year." Reuters. Thomson Reuters, 27 Feb. 2015. Web. 10 May 2015.

Wallis, Daniel. "Pot Shops Buzz, Crime Eases as Colorado Law Marks 6 Months." Reuters. Thomson Reuters, 03 July 2014. Web. 10 May 2015.

Weed, Julie. "Book Your 'Bud And Breakfast', Marijuana Tourism Is Growing In Colorado And Washington." Forbes. Forbes Magazine, 17 Mar. 2015. Web. 10 May 2015.