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Marijuana Tax Revenue and Education


A few years ago, Colorado voters approved the legal sale of marijuana to adults 21 and older with a portion of the tax revenue going to education. Though the amount of tax revenue that comes from marijuana sales is minimal -- around 1 percent of the state's total education budget -- the money is directed to a variety of programs, including school construction, bullying prevention and behavioral health. This is a brief glimpse of the revenue that comes into the Colorado Department of Education through marijuana sales.


In 2012, Colorado voters approved Amendment 64 that allowed adults 21 and older to consume or possess marijuana and required the state to set up a regulatory structure for the retail marijuana industry. It also mandated the state legislature to enact an excise tax on marijuana with the first $40 million collected to go to public school construction.

In 2013, voters approved Proposition AA, which allowed the state to levy up to a 15 percent excise tax on unprocessed marijuana and up to a 15 percent retail tax on retail marijuana. (The state chose to levy a 10 percent tax on retail marijuana.) In addition, both medical and retail marijuana continue to be subject to the state’s 2.9 percent sales tax.

How is marijuana tax revenue distributed?

This image shows the flow of marijuana tax revenue in Colorado.

There are two ways tax revenue comes into the state's coffers.

  • Excise tax: The first $40 million in excise tax on wholesale retail marijuana is credited to the state’s Building Excellent Schools Today (BEST) fund. Revenue in excess of $40 million is credited to the Public School Fund.
  • Sales tax: Fifteen percent of the revenue from the 10 percent tax on marijuana retail sales is allocated to local governments and apportioned according to the percentage of marijuana sales within city and county boundaries. The remaining 85 percent goes to the Marijuana Tax Cash Fund (MTCF), which is used for health care, monitoring the health effects of marijuana, health education, substance abuse prevention and treatment programs, and law enforcement. The entirety of the 2.9 percent sales tax on both retail and medical marijuana also is credited to the MTCF.

Building Excellent Schools Today (BEST)

Written into Amendment 64 is a commitment to credit the state’s BEST program with the first $40 million generated each fiscal year from the marijuana excise tax to renovate existing school buildings or construct new buildings. The fund prioritizes health, safety and security issues such as asbestos removal, new roofs, building code violations, and poor indoor air quality. BEST grants are competitive, awarded annually and in most cases must be supplemented with local district matching funds.

The $40 million in marijuana tax revenue is just one of four funding sources for BEST, the total of which is only a fraction of what is needed for the repair, maintenance and construction of Colorado’s public schools. A statewide facility assessment determined a need of nearly $18 billion in capital construction projected through 2018. Here is how marijuana excise tax revenue has been used for the BEST program:

  • In Fiscal Year 2015-16, $40 million in marijuana excise tax was allocated to the BEST program plus an additional $40 million was paid into the fund from a one-time disbursement resulting from Proposition BB, a successful statewide ballot measure in 2015 that allowed the state to keep the surplus in marijuana tax revenue.
  • In Fiscal Year 2016-17, $40 million of marijuana excise tax was allocated to the BEST program with the excess $5.7 million going to the Public School Fund.

Marijuana Tax Cash Fund (MTCF)

In 2014, the state legislature created the Marijuana Tax Cash Fund to collect sales tax revenue from retail and medical marijuana. Revenue from MTCF must be spent the following year on health care, to monitor the health effects of marijuana, health education, substance abuse prevention and treatment programs and law enforcement.

Under MTCF CDE received money specifically for:

  • The School Health Professional Grant program to address behavioral health issues in schools.
  • A grant program to help schools and districts set up initiatives to reduce the frequency of bullying incidents.
  • Grants to fund drop-out prevention programs.
  • Early Literacy Competitive Grants to ensure reading is embedded into K-3 curriculum. (For 2016-17 only).

Marijuana tax revenue distributions to the Colorado Department of Education, 2015-2017

School Construction – BEST

  • 2015-16: $80 million*
  • 2016-17: $40 million
*Includes $40 million from one-time tax revenue disbursement approved by voters, allowing Colorado to keep surplus

Early Literacy Competitive Grant Program

  • 2016-17: $4.4 million

School Health Professional Grant Program

  • 2015-16: $2.3 million
  • 2016-17: $2.3 million

School Bullying Prevention & Education Grant Program

  • 2015-16: $2 million
  • 2016-17: $900,000

Drop-out Prevention Programs 2015-16: $2 million

  • 2016-17: $900,000

Public School Fund

  • 2016-17: $5.7 million



  • Total 2015-16 marijuana revenue for CDE: $86.3 million
  • Total 2015-16 state education funding: $5.3 billion


  • Total 2016-17 marijuana revenue for CDE: $54.2 million
  • Total 2016-17 state education funding: $5.4 billion

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