Before Colorado legalized the recreational use of marijuana, it was predicted the state could earn around $70 million in tax revenue for freeing the weed. After the first stores selling cannabis opened in on January 1st, 2014, Colorado state officials have now confirmed how much drug money they received in a full year. That figure is $44 million — less than projected.
The discrepancy between expectations and reality has led to gloomy projections for the weed business from some corners, but others have argued the figure doesn't take into account the additional revenue provided by medical marijuana. Add that number and the figure rises to $76 million. Animal notes that the $44 million also doesn't factor in money earned from less direct sources — pot fans who chose to travel to the state to indulge their tastes, advertising purchased by weed growers, and the money saved when police don't have to prosecute people for having a puff.
Add medical marijuana too, and the figure hits $76 million
Even if the tax revenue is a decrease on projections, a slightly slow start is to be expected. Like the plants themselves, the entire industry has had to be grown in size, with the product no longer coming from illegal grow rooms, but giant state-approved farms and greenhouses. In 2013, just before Colorado legalized pot, The Wall Street Journal reported on the difficulties growers had in turning a profit in the nascent industry, given the labor-intensive nature of the jobs and the lack of investment.
That's changing now, as a number of investors have stepped in with cash for weed-based products. Y Combinator, the accelerator who provided money for Reddit, Dropbox, and Stripe — among other startups — recently backed medical marijuana delivery app Meadow, its first step into the industry. And Snoop Dogg, perhaps more familiar with the business of pot smoking than Y Combinator, is reportedly raising $25 million to invest in the industry.