Bathing in taxes collected from marijuana sales, Pueblo County expects to put some of those dollars to work on public infrastructure projects, as well as to fund the world’s first college scholarship program created from marijuana taxes.
So far this year, Pueblo County has collected $729,000 in taxes from all marijuana sales. Recreational pot sales are prohibited within Pueblo city limits. Taxes include a county 3.5 percent tax, the state allocation of its 10 percent tax, 1 percent retail sales tax and 1 percent medical sales tax.
Set to begin Jan. 1, a 5 percent excise tax on marijuana grown in the county and exported is expected eventually to funnel around $3.5 million annually into county coffers, said Pueblo County Commissioner Sal Pace. The tax collections begin at 1 percent and ramp up annually. By the year 2020, the excise is estimated to grow to $70 million in income for the county. It is this segment of money that will fund scholarships and the capital improvement projects.
Last year, Pueblo County collected more than $1 million in taxes from marijuana, according to its finance department.
Colorado collected more than $60 million last year from marijuana taxes, including sales for medical uses. That compares with $78.3 million in the first nine months of this year, according to the Colorado Department of Revenue.
The county made marijuana businesses a “use by right” in industrial and business districts, as well as in agricultural production areas.
Agricultural areas of the county, “are areas where we want to encourage [production],” Pace said. “With any sort of boom, you’ll see positives and negatives.
“We have a spotlight on the cultivation side for certain. There [have] been positive economic impacts. At the end of the day, diversifying our economy is important, and we can’t hang our hat on [only] one industry.”
“If we have fallow ag land that hasn’t been providing jobs for decades, we’ll welcome that,” said Pace, adding that the county is also working to attract and grow the high-tech and steel industries there.
Professor of management at Colorado State University-Pueblo and Director of the Healy Center for Business, Research and Services, Mike Wakefield said while marijuana taxes have contributed to the economy, more economic prosperity will come from studying its medicinal attributes. Pueblo could become the epicenter for medical marijuana research, further bolstering the economy.
“The potential it holds in the pharmaceutical [sector] is far greater and very beneficial,” than tax collections, Wakefield said. “Marijuana is made of 480 compounds, 66 of which are cannabinoids and only one — THC — that produces the euphoric feeling.
“Maybe combining those [non-THC] compounds with other plants will help other illnesses,” he added. If that happens, “the impact [of studying] organic pharmaceuticals could establish a new industry in the region.”
Some people use medical marijuana because of their diagnoses in post-traumatic stress disorder, epilepsy, seizure disorder, multiple sclerosis and other illnesses, Wakefield said.
Because CSU receives federal funding and because marijuana is illegal from a federal standpoint, it cannot conduct cannabis research, he said. However, he said, “We have the people with the knowledge and skill sets to conduct that research in the biology and chemistry departments.”
Marijuana has bolstered the building trades in the area too, Pace said. Last year, 36 percent of all construction dollars were related to cannabis.
Increased marijuana cultivation will also increase land values, “so you will see increased property taxes,” Pace said.
Residents: It’s not all good news
Pueblo native Sandy McClure believes recreational marijuana legalization has lowered the area’s quality of life.
“It’s brought a lot of negativity to the area,” and tarnished the state’s image, McClure said. “It used to be, ‘Oh, you live in Colorado. Have you seen Pikes Peak?’ Now, it’s like, ‘Oh, you live in Colorado, where marijuana’s legal.’”
Marijuana use has harmed business at Graham’s Grill, said owner Heather Graham. Instead of drinking alcohol, people use cannabis, she said.
“Alcohol reps … they feel the same way. There was a significant decrease in the product line when marijuana became legal,” Graham said.
Marijuana’s hidden societal costs
Since the legalization of recreational cannabis sales, Colorado’s population has grown by more than 200,000 people, some of whom attribute that growth to cannabis, according to weedhorn.com, citing U.S. Census Bureau data.
The industry has also resulted in an increased homeless population, say some.
“As far as I’m concerned, we’ve had more homeless, more problems downtown and [people] asking for money,” McClure said.
“There are some hidden costs that are not quantified at all,” Wakefield said, pointing to Posada, an organization in Pueblo that helps indigent and homeless people. “I read that almost immediately after the law was passed, they experienced a 58 percent increase in their caseload.”
Posada Case Manager Veronica Gold confirmed the increase in the caseload at the agency after recreational marijuana became legal, but said she could not say why.
Wakefield also believes cannabis sales have resulted in higher hidden costs to the mental health and social services sectors.
The Spot is a Pueblo West business that claims to be Southern Colorado’s largest recreational marijuana dispensary, according to company Vice President and COO, Dave Munn. At 748 Industrial Blvd., The Spot employs about 30 people in retail sales and 20 in its cultivation area, Munn said. The company has plans to expand to Trinidad.
The Spot is taxed “very heavily,” Munn said. “It’s an atrocious amount of money. It really is. You watch a huge portion of what you do every day … disappear.”
As for The Spot’s contribution to the economy, “We’ve put $100,000 in security cameras and an alarm system, $3 million in construction,” he said. “The impact to the local community is astounding.”