Don't Mess With Taxes

Colorado collected around $12 million in taxes from the sale of recreational marijuana in the first six months of the year.

That amount is substantially less than what the pro-pot contingent advertised when the measure went before voters.

The Colorado Legislative Council's September 2013 fiscal impact statement estimated that the legal sale of recreational marijuana would bring in around $70 million in the first year.

To meet that tax projection, sales are really going to have to pick up.

Perhaps the state should consider promoting pot tours.

Toking tourists: A study conducted by the Marijuana Policy Group for the Colorado Department of Revenue found that tourists purchase as much as 2.54 tons of pot a year.

"However, this figure is expected to increase as more counties and tax districts begin permitting retail store fronts," write the report authors.

The group's rough estimate for future total annual tourist demand is roughly double the current level. They expect marijuana sales to out-of-staters to range from 4.3 metric tons and 5.1 metric tons after more retail stores open in Colorado's mountain communities.

Why the focus on Colorado's mountain towns. The report cites two reasons.

First, visitors to Colorado cannot obtain medical marijuana cards and therefore must purchase pot exclusively through retail venders. The state's mountainous tourist destinations have a high ratio of visitors to residents, so the retail market there will supply primarily tourist demands.

Tourism Impact for Mountain Counties versus Metro Area Counties
Retail Demand is Highly Correlated with Tourists

Source: Marijuana Policy Group's estimates based on Colorado Department of Revenue Retail Sales data and demographics.

Second, retail prices in mountain communities are 50-to-100 percent higher than prices for similar marijuana strains in the Front Range, the north-to-south alignment of towns at the eastern foothills of the Rocky Mountains.

The price difference between these locations is most pronounced for small amounts of weed, according to the report. A single gram serving near Keystone resort costs $14, says the study, whereas the same gram for an identical strain of marijuana costs half that in Denver.

Oregon tax potential from legal weed: The potential for taxable pot sales to tourists has caught the eye of folks in Oregon who are pushing for legal recreational weed in that state.

Oregon Cannabis Tax Revenue Estimate, a July report prepared by ECONorthwest, examines how much tax money might be generated in the short term if state voters OK a November ballot measure to legalize marijuana.

The bottom line estimate for the Beaver State: $38.5 million in excise tax revenue during the first fiscal year of legal pot.

ECONorthwest estimate of potential legal marijuana tax revenue for Oregon

Travel Oregon says that for 2011, the most current yearly data available, an estimated 23.1 million people from outside Oregon visited that Pacific Northwest state.

ECONorthwest notes that if those Oregon tourists had averaged marijuana purchases of .014 ounces -- that's the amount Colorado pot tourists bought in early 2014 after the drug became legal there -- Oregon would have sold 316,041 ounces to out-of-staters.

In addition, the study notes that 71,000 Washington residents and 5,200 from Idaho commute each day to jobs in Oregon. Because Oregon has no state sales tax, many of these workers pick up a few tax-free items before heading back to their out-of-state homes.

"All are potential marijuana buyers," notes the ECONorthwest report. "With retail prices less in Oregon than in Washington, we estimate sales to commuters will equal 25 percent of that of tourists. Therefore, we estimate 87,905 ounces [will be] sold to out-of-state commuters in fiscal year 2017."

Taxes as a sales pitch: As the Oregon report evidences, and as I posted over at Bankrate, taxes are playing a part in the national legal marijuana debate.

In that post last week at my other tax blog, Oregon officials noted that the projected $38.5 million in taxes is about two-thirds of what the state now collects on cigars and snuff. But while tobacco sales are trending down, the marijuana market looks to be a growing revenue source.

Also last week over at Bankrate, I looked at why some college educators oppose education tax credit changes.

One of their concerns is that a House-approved proposal to consolidate the American Opportunity and Lifetime Learning tax credits would penalize older students who cannot attend classes full-time.

I usually post my additional tax thoughts at Bankrate Taxes Blog every Tuesday and Thursday. If you miss them there, check here at the ol' blog the following weekend -- or soon thereafter if I took some me time on Saturday and Sunday -- for highlights and links.

You also might find these items of interest:

• Pot's potential to help pay state bills
• Marijuana sales, tax collections good for Colorado coffers
• Banks get OK from U.S. House to work with marijuana sellers