Why Education Could Be The Biggest Beneficiary Of Cannabis Legalization

Colorado legalized recreational cannabis in 2014, but decided to keep taxes relatively low, especially compared to Washington, where effective tax rates stand around 37 percent.

Despite the reduced taxes and lower population, Colorado has collected more than $369 million in taxes from cannabis in the last three years, Tom Adams, editor-in-cheif of Arcview Market Research said in a recent conversation. Washington has done even better, surpassing the $400 million threshold since 2014.

A report from New Frontier Data arrived to similar results, estimating taxes raised by Colorado since 2014 at $367 million. However, more interesting than these figures is the number allocated to education programs.

Investing In Education

Almost 70 percent of the total taxes raised from medical and recreational cannabis sales in Colorado were spent on state-sponsored programs; $119 million (or 32 percent) were directed to its school construction fund, according to the research.

Other programs funded by cannabis taxes in Colorado:

Substance Abuse Prevention: $7.22 million
Jail-based Behavioral Health Services: $5.1 million
School Bullying Prevention & Education: $2.9 million
Drop-out Prevention Programs: $2.9 million
Local Impact Grants: $2.26 million
Youth Mentoring Services: $2.0 million

The Potential

Beyond what's been done, it’s important to think about the potential use of these taxes.

Colorado, Washington and Oregon combined generated more than $500 million in taxes from cannabis sales throughout 2016, according to ArcView. A recent Leafly article stated that, based on the inflation-adjusted median cost of building a school in the U.S., these states could have constructed about 28 elementary schools, 17 middle schools or 10 high schools.

Now, imagine how much could the U.S. be doing for future generations if tax revenue hits $1.8 billion by 2020, like New Frontiers Data expects. If, like Colorado, all states with legal weed allocated 32 percent of the taxes collected from cannabis sales to education programs, we would probably see about $576 million going into the school system in 2020.

Big Contributors

Some of the largest cannabis-related companies, and thus, some of the most relevant potential contributors to the advancement of education in North America include: