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Why pot tax can't save a Jeffco school

In the wake of the Jefferson County school board’s controversial decision to shut down an elementary school, a lot of viewers are asking 9NEWS a familiar question: wasn’t marijuana supposed to pay for schools? And if so, why is there a money problem forcing a school to close?

Credit: 9NEWS
Jefferson County Public Schools

In the wake of the Jefferson County school board’s controversial decision to shut down an elementary school, a lot of viewers are asking 9NEWS a familiar question: wasn’t marijuana supposed to pay for schools? And if so, why is there a money problem forcing a school to close?

The answer is: yes, pot raises money for schools--but not that much money.

It’s a common misunderstanding that we’ve explained before.

While the backers of Amendment 64 promoted the idea of raising $40 million for schools front-and-center in the 2012 campaign to legalize pot in Colorado, they did not provide voters with context on how much of a dent that makes in school finance.

The first $40 million of excise tax (a wholesale tax before the product reaches the store shelf) on marijuana raised each year in Colorado is dedicated to a program called BEST, which awards competitive grants to school construction projects—mostly to improve buildings in rural districts

The fact is: $40 million isn’t enough to build a bunch of schools, much less pay the teachers and administrators needed to keep a bunch of schools running.

It only amounts to 0.7 percent of the state’s nearly $5.5 billion total budget for public school spending this year.

Pot does raise more than $40 million in taxes each year because state lawmakers got the voters to approve a special sales tax on the drug in addition to the wholesale tax envisioned by the campaign to legalize it.

That sales tax does raise more money than the excise tax— but it was never promised to education. The sales tax is used for a variety of marijuana enforcement and public health initiatives.

If you add up all the state tax on pot it only amounted to about $200 million in calendar year 2016.

Even if you spent all of that money on schools, it’d only amount to about 3.7 percent of the state education budget, and that wouldn’t be enough to end the budget problems of every district in the state.

While cannabis raises a significant amount of money, an amount that continues to grow with increasing sales, it’s not a life-changing amount of money.

It’s a sin tax, much like the tax on cigarettes or gambling—and sin taxes don’t tend to generate enough money to pay all the bills a state government needs to pay.

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