Following the landmark 2012 legalization of recreational marijuana in Colorado and subsequent opening of retail pot shops in 2013, Colorado has raised twenty-five million dollars in tax revenue.
In a report published by the Office of the Governor in February, Governor John Hickenlooper estimated that sales of medical and recreational marijuana could break one billion dollars, which would earn the state 134 million dollars in taxes.
Clearly, the new marijuana economy is off to a booming start. As with all new processes, however, there are a few kinks in the system, most notably in the financial area.
Because possession and sale of marijuana is still illegal under federal law, large banks and credit unions have been wary of extending services to marijuana retailers. This has meant that the owners of pot shops have been operating on a cash only basis. While cash is flexible, it comes with a host of problems, including the ease of burglary.
Last Wednesday, the Colorado state legislature passed the “Marijuana Business Access To Banking Act of 2013,” a bill that would allow owners access to basic banking services, such as credit, and the ability to create “Cannabis Credit Co-ops”–essentially a collective of owners that would be able to create and sustain their own lines of credit.
There are some unknowns that may doom the bill, most notably in the interaction between the pot collectives and the U.S. Federal Reserve, which may not allow the co-ops to function, as marijuana is still illegal under U.S. Law.
Though the bill faces an uncertain future, the passage of the law is an act of good faith by the Colorado state legislature.
The most obvious perk to the passage of this bill is that everyone benefits. The state continues to rake in a large amount of tax revenue, and the owners are now allowed greater flexibility in the financial elements of the business. The customer also benefits, as he or she will now have greater flexibility in purchasing marijuana.
There are three more reasons that the passage of the law is a very good thing. By passing it, the assembly has untied one of the biggest knots left in the process of legalization.
Additionally, the state has shown that they will listen to the needs of the owners–those taking the largest risk in this new venture–and aid them, instead of simply taking tax revenue off the top and letting the owners figure it out for themselves.
This is great news, because instead of pointing at the tax revenues, patting themselves on the back, and saying “Ehh–That’s good enough,” the state assembly is working to improve the efficiency of the system.
Most importantly, the passage of this bill shows that the state legislature will honor the decision made by Coloradans in 2012, legalizing marijuana in the first place. Instead of fighting what has already been decided by the people, the legislature has acted as an instrument of the public–the way government is supposed to function.
This is an important turn of events–the path that Colorado is making towards the legitimization of pot is one that is being watched closely by many other states. If Colorado makes a mess of it, fewer states will be willing to take the chance on legalization. In this particular instance, the Colorado state legislature got it right.
Whether the bill works in the long run is largely besides the point — the very fact that the state is taking an active role in the legalization process means that they are willing to put up with short term setbacks in order to facilitate the stability and growth of the trade in the long run.
Jesse Carey can be reached at firstname.lastname@example.org