Colorado released its sales and tax revenue figures for the first month of legal sales, showing $14 million in recreational marijuana sold bringing in $2.1 million in revenue for the state. Despite that being about, oh, $2.1 million more than the state has ever earned in the recreational marijuana market, the prohibitionists with Patrick Kennedy’s Coerced Rehab All Potheads Project, SAM, are complaining that there wasn’t enough tax revenue earned in January.
“It appears that Colorado is falling well short of the state’s revenue projection from marijuana sales,” barked Kevin Sabet. “Instead, the number from January is less than $2 million, far below estimates claimed by both the Governor and legalization advocates.”
Christine Tatum, wife of Denver rehab entrepreneur Dr. Christian Thurstone, took to Twitter to screech, “@ScottMGagnon @KevinSabet Can’t wait to see how #Colorado makes up $132M in projected tax revenue in five months. #sciencenotrhetoric”
The game here is to bolster their talking point that legalizers are lying to the voters when we claim marijuana taxation will bring great windfall to the state. They often like to compare it to legalizing the lottery or casino gambling, without considering that the tax revenue and public safety generated by state-run gaming is far greater now than it was when mobsters were running it. Still, we should take a look at the figures and examine their claim.
According to reports in the Denver Post from last month, the governor’s office projected $35.3 million dollars in estimated revenue for the current fiscal year. Either Tatum doesn’t understand how subtraction works or how fiscal years work. Colorado’s current fiscal year runs from July 2013 through June 2014, so, yes, there are five more months of tax revenues to make up, but only $33.2 million to make up, not $132 million, which is the estimate for recreational and medical sales combined for the full 12-month July 2014 to June 2015 fiscal year.
But what of Sabet’s claim that revenues are “falling well short”? By my math, $35.3 million in the current fiscal year works out to about $5.9 million in tax revenues per month. So, sure, coming in at a bit over one-third what the governor projected seems a little low.
Until you read the fine print. Estimating how much money you’d make selling something that’s never been legally sold before isn’t an exact science. The $35.3 million revenue estimate came with this important caveat, “We anticipate that these projections will change monthly as more data is collected and actual revenue could fall short of these projections.”
Now, what considerations could make these revenues fall short? Recall that during January, as lines snaked around the block, the few pot shops that were open were restricting their sales volume to avoid running out of product. The Denver Channel reported in the first week how retailers were “limiting customers to an eighth of an ounce”, due to the fact their inventory was a fraction of product from their medical plants. Retailers couldn’t produce enough product to meet customer demand. The governor’s estimate was based on $117.8 million in sales, which works out to $19.6 million per month. January tallied $14 million in sales. Do you suppose if customers could have purchased the full ounce they are legally permitted, sales might have topped that $19.6 million?
Also consider that financial projections aren’t made in linear fashion, as if $2.1 million in taxes and $14 million in revenue are going to be the consistent figures going forward. Monthly figures should increase, as first more pot shops continue opening and second as the recreational marijuana crop that couldn’t be planted until January 1st gets harvested.
Kevin Sabet, though, is doubling down on his infamous Sabet Conjecture. “Of course, just like alcohol and tobacco revenue, we know that the sales of this intoxicant [sic] will bring in far less than the costs of its use,” he opines. ”In fact, every $1 in alcohol and tobacco revenue the state gains comes at a price of $10 in lost social costs.”
Well, by that measure, there should have been $21 million in addition social costs in January due to legalized marijuana. $21 million in costs that didn’t exist before when most of those same people were already smoking pot, albeit illegally. Hell, even if marijuana legalization was a “break-even” proposition, the $2.1 million in alleged new social costs would more than offset the costs we didn’t spend on law enforcement – not just the less-than-one-ounce cases that went away post-legalization, but also three-out-of-four of the more-than-an-ounce and cultivation cases that disappeared, too, when pot stopped being a probable cause and drug dogs stopped alerting for pot. The Colorado Center on Law & Policy estimated law enforcement savings of $12 million per year, so that’s another $1 million to offset whatever new social costs there were.
But Sabet has already cranked up the vision of Colorado’s marijuana peril, warning, “Already, legalization in Colorado has been characterized by children visiting hospital emergency rooms for marijuana poisonings from ‘pot cookies,’ increased marijuana use in schools, and a 40% increase in workplace and school drug tests.” Nobody wants to see kids accidentally ingesting medibles, but “poison” is “a substance with an inherent property that tends to destroy life or impair health” – none of those kids have died or suffered lasting health effects. Nobody wants more schoolchildren using pot recreationally, but are they swapping it out for the alcohol use that’s continuing to decline? Workplace drug tests just tell us more people smoke pot, unsurprising, now that it’s legal. But even giving Sabet the benefit of a metric buttload of doubt, does he really think a few kids accidentally eating Cheeba Chews cost Colorado $2.1 million?
Sabet and Tatum wish to paint a picture where marijuana legalizers promised this absolutely harmless plant would raise billions of dollars and solve all the world’s problems (to be fair, there are some stoners who believe this literally). All we’ve promised is that it is less harmful than legal alcohol and tobacco, it will transfer the current dollars from untaxed criminals to taxed businesses, it will redirect law enforcement to actual crime, it will provide a safer, better labeled product for the current consumers, and it will provide instruction on safe, responsible use for new consumers they wouldn’t get from prohibition.