Surprising Supporters Want to Cash in on Big Green

In recent Money and Markets articles, I’ve been writing about the potential pot of gold that the legalization of marijuana across the U.S. represents for investors who jump on the Big Green bandwagon early.

I’ve explained why marijuana could right now be where alcohol was just before Prohibition was repealed. And told you how Old Joe Kennedy — JFK’s father — by being a shrewd businessman and a savvy investor made his family a fortune when he capitalized on the repeal of an unpopular law in 1932.

Unfortunately, I can’t turn back the clock so you can get in with Old Joe but I can tell you that the marijuana industry may be the next best thing.

And in today’s article, I am going reveal a group of high-profile people who are surprising supporters of pot legalization because they want to cash in on what The New York Times calls “The Next Gold Rush,” too.

And these people are …

The governors of states across the U.S.

Here’s why …

Brian Vicente of the Vicente Sederberg Law Firm, a firm that specializes in marijuana law, recently told Forbes magazine:

“The governors are fighting the federal government over marijuana laws for two reasons. The first is economic, meaning tax revenue and jobs. The second reason is that it’s a better use of law enforcement’s time.”

In states that have legalized marijuana, continues Vicente:

“The cannabis tax revenue is very important to them. It’s three times as much as alcohol tax and it has quickly become entrenched in the budget.”

In fact, with cigarette smoking on the decline — as I explained in my June 23 Money and Markets article — and gas prices going lower, states can’t tap traditional areas for easy tax gains.

Meanwhile, taxpayers demand more and more government services. But they don’t want to pay higher taxes.

So, state governors end up stuck between the proverbial rock and a hard place. That’s why many see Big Green as the solution.

Indeed, in the current era of dwindling state resources … and with the Trump administration looking at numerous ways to cut state funding at the federal level … the additional money that would come from regulated legal cannabis sales could be a real lifesaver for some states.

Most states that have legalized marijuana tax it at a high rate. And, the pot industry accepts those taxes as a cost of doing business. So, for those states that have legalized marijuana, it has paid off handsomely.

Cash-strapped states see Big Green as a solution.

For example, Washington state’s cannabis retail tax rate is 37%. Washington’s total tax take from marijuana for fiscal year 2016 was $185 million. And that’s expected to increase 25% to $233 million for fiscal year 2017.

California will be charging 15%. And the state believes it will generate $1 billion — yes, $1 billion — in additional tax revenues.

Colorado — which along with Washington state led the charge to legalize recreational marijuana — has the most mature cannabis market and maintains a two-tiered marijuana tax system.

For medical marijuana, Colorado applies a 2.9% sales tax to those sales, plus license and application fees. Recreational marijuana, also known as “adult-use,” is taxed more aggressively. In addition to the sales tax of 2.9%, the state charges an excise tax of 15% and a special sales tax of 10%, plus license and application fees.

How has it all worked out in Colorado?

Read on. I think you’ll be surprised.

Colorado has collected more than $500 million — that’s a half-billion dollars — in tax revenue from the cannabis industry since recreational sales began in 2014, according to a report from VS Strategies based on information from the Colorado Department of Revenue.

And so far in this year alone, $95 million of tax revenue has gone into state coffers as marijuana sales have topped $100 million for 12 months in a row!

Related story: Colorado’s … and Soon, California’s … Cannabis Capitalism

The state has a Marijuana Tax Cash Fund from which it distributes its cannabis cash. Here’s a chart that reports how all that money has been spent:

As you can see, a whopping 51.3% of the marijuana tax revenue collected has been spent on K-12 education with $117.9 million earmarked for school construction projects.

On the local level, it’s been reported that Pueblo County used $420,000 in cannabis tax revenue to provide college scholarships to 210 students.

In the town of Edgewater, cannabis tax revenue accounted for 20% of the budget in 2016. The town just west of Denver has used that money to repair city infrastructure and to begin construction of a new city complex.

In Aurora, city council members have set aside $1.5 million in cannabis tax revenue to aid the homeless. And they recently used $900,000 of the revenue to renovate an old Aurora Police Department building into a homeless resource center.

The bottom line: Legalizing, regulating and taxing marijuana for adult use has generated hundreds of millions of dollars for Colorado. And the state’s cannabis cash has funded everything from school construction to substance-abuse treatment to fighting homelessness.

Now, you know why U.S. state governors — along with some of the world’s wealthiest families — are quietly but quickly pursuing the pot of gold at the end of the Big Green rainbow.

You may want to consider doing the same.

Best wishes,

Bill Hall

P.S. Remember: Pot stocks could make you wealthy beyond your wildest hopes … transform your life … and make your retirement dreams come true. The good news is, we’ve barely scratched the surface when it comes to the millionaire-making profits this industry will hand investors in the months and years ahead. And Marijuana Millionaire members will be right in the thick of it, buying today’s best pot stocks and going for the big gains that can make them rich. I’d be honored if you’d join us. And today only, I’ll gladly pay $2,697 towards your membership. Read more here …

Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.