[DannyTN]

I suspect the tax money is a less than zero sum game for several reasons.

They say that Colorado is on pace to sell $1 billion worth of pot in 2016. Let's make the math easy and assume a 10% tax rate. That's $100 million in new taxes.

But where did that $1 billion come from?

• Some of it comes from people from out of state and will be a temporary net new tax revenue to Colorado until the other states lower their standards to Colorado's.
• Some of the in-state revenues, came from previously illegal pot sales. Those illegal sales weren't taxed. So that does represents a net new tax. And at the same time defunds illegal activity a definite plus.
• The rest of the in-state revenues is money that would have been spent on other items or that would have been saved. If it would have been spent on other items, then the new taxes have displaced the old taxes.
  • Now I supposed if people switched from smoking tobacco to pot, that money is no less productive than it would have been. But it is not new tax revenues. It's simply displaced tobacco sales taxes. And there may be more health issues with pot than tobacco, particularly mental illness.
  • If the money would have been spent on other entertainment pursuits, then again, the money wouldn't have been particularly productive. But the entertainment choices may be narrowing as there are fewer dollars chaising non-pot entertainment.
  • If the money would have been spent on long term assets such as land and buildings, or productive assets, equipment, education, investments, savings, etc, then wealth creation has been replaced by burning pot.

The real downside is the mental illness, by-polar and schizophrenia that pot use has been linked to. Colorado may find themselves with a future health and disability crisis. If so they will have burned their future up in pot.

[discostu]

In this case it’s just the usual government shell game. We’re dealing with this in AZ, the layers of government have learned that Americans would really like their schools to not suck, so they push various tax hikes and other things with the promise of “we’ll use the money for the schools”, so people approve. Then they don’t spend the money on the schools, because if they actually did spend the money on the schools the schools might stop sucking, and then how would they pass the next tax hike. AZ is currently in a massive legal battle because people finally got tired of that shell game and sued the government, which didn’t stop the legislature from pushing a bill (which unfortunately just got passed) to sell off the AZ trust land and give the money to the schools. Of course people didn’t notice the small section of that bill that says “oh and we can spend money earmarked for the schools on corrections and other stuff”, which not only means we’ll sell our trust land, but the schools won’t get that money, but it means if they lose the lawsuits on the previous bills they now get a pass.

CO has pulled in close to 6 times the amount promised for the schools in pot taxes. Now yes, some of that money is probably coming from other places (haven’t seen anything about other sin taxes but I’d agree with you some of those are probably making less than they used to), but I doubt it’s enough to give them a valid reason to have only put half the promised money into the school budgets. But they know if they properly fund the schools the next tax quest won’t be as easy a sell.