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Colorado Is Using Marijuana Industry Tax Revenues to Fight Black Market


Colorado is the first state to use its own tax dollars from the legal marijuana industry to help local law enforcement crackdown on the illegal marijuana industry. Governor Hickenlooper signed legislation allowing $6 million annually to be used for reimbursing police departments working against the black market.

Law enforcement groups backed the measure, according to Herald and News. Law enforcement says the black market has increased since marijuana became legal in 2012. The marijuana industry also backed the bill stating that the black market is undercutting marijuana prices and that it gives legalization “a bad name.”

Hickenlooper said, “We don’t want people to say they’re trying to grow for medical purposes, or licensed recreational uses, and instead they’re shipping it out of state.”

Oregon has a similar program, but law enforcement agencies are not directed to use the money specifically for the state’s black market.

Much of the efforts to reduce the black market will be focused on rural areas where legal marijuana may not be available and local taxes aren’t being collected. Some say the rural areas are exploiting the state’s law and are cultivating marijuana for out-of-state sales.

These rural areas have limited law enforcement resources and cannot investigate every complaint that comes in. Michael Phibbs of the Colorado Association of Chiefs of Police said, “An investigation like this can be very time-consuming and expensive.”

Part of the reason for the U.S. government staying out of Colorado’s legal marijuana experiment was that the state is supposed to prevent marijuana from traveling to other states where it’s not legal.

Growers in Colorado must obtain proper licensing and use the seed-to-sale tracking system, but not all growers are abiding by those rules.

Kevin Gallagher of Cannabis Business Alliance said, “The black market certainly hurts the regulated industry.”

In 2016 alone, Colorado law enforcement agencies seized 22,000 pounds of marijuana intended to be shipped out-of-state for sale.

Governor Hickenlooper is expected to sign legislation restricting the number of marijuana plants that can be grown in one household to 12 total, regardless of how many legal adults reside in the home. The new statewide limit takes effect in 2018.