Colorado collected $3.1 billion in marijuana taxes. Here’s how much actually reaches schools.

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

When Colorado voters said yes to legal marijuana back in 2012, schools were a big part of the pitch. More than a decade in, the state has collected over 3.1 billion dollars in tax revenue. So where does it all go?

That number still carries a certain weight. It suggests a level of impact that would be visible in classrooms across the state.

But when the dollars are traced through the system, then stacked up against what it actually costs to run schools, the effect looks different. Not invisible. Just smaller than people tend to expect.

A closer look at what schools receive

In the 2024 to 2025 fiscal year, Colorado collected about 231.1 million dollars in marijuana tax revenue, according to the state’s nonpartisan Legislative Council Staff.

Some of that reached K–12 education. About 83.3 million dollars in total. Construction funding through the Building Excellent Schools Today program. Distributions into the State Public School Fund. Smaller appropriations tied to education programs.

Only part of it touches day to day school funding. Roughly 19.8 million dollars flows into the state’s school finance system.

Set against the broader system, the scale looks much smaller. The state’s share of school funding is about 5.4 billion dollars.

Emily Dohrman, a senior economist with the Colorado Legislative Council Staff, says marijuana revenue is “a minor contributor to total education spending.”

She noted that the State Public School Fund is projected to receive about 19.8 million dollars from marijuana sales tax revenue in fiscal year 2025 to 2026. Total state support for school finance, by comparison, is about 5.4 billion dollars.

Even the construction side follows the same pattern. The BEST program is projected to receive about 39.3 million dollars from marijuana excise taxes in fiscal year 2025–26, according to Legislative Council Staff, while total BEST expenditures are expected to reach about 417 million dollars.

If the 83.3 million dollars were spread evenly across Colorado’s 178 school districts, it would come out to a few hundred thousand dollars per district. That is not how the system works. But it offers a rough sense of scale.

In practice, the distribution is uneven. Some districts receive construction grants. Others do not.

What voters actually approved

Back in 2012, Amendment 64 included a specific education provision. The first 40 million dollars in annual marijuana excise tax revenue would be directed to school construction through the BEST program.

Construction, not operations.

Dohrman clarified that the constitutional requirement stops at that first 40 million dollars. The fact that all excise tax revenue now goes to BEST is a decision made later by lawmakers. It was not part of the original mandate.

The purpose, though, never shifted. These dollars are meant to fix buildings. Replace aging facilities. Address safety issues.

They are not used for teacher salaries or classroom materials.

That distinction carries through how the funding is used.

Following how the system works

The rest of the revenue takes a more layered path.

Colorado applies a 15 percent excise tax when marijuana is transferred from a grower to a retailer. That feeds into school construction. At the retail level, a separate 15 percent special sales tax is collected, along with the standard 2.9 percent state sales tax.

One recent change is worth noting. Senate Bill 25-268 reshuffled how special marijuana sales tax revenue gets divided up, starting this fiscal year. Local governments used to get 10 percent of that money — that share got cut down to 3.5 percent. 

The state is now directing more into the Marijuana Tax Cash Fund and carved out a brand new distribution to the Marijuana Cash Fund that didn’t exist before.

From there, the money is divided.

About 72.2 percent of the special sales tax goes to the Marijuana Tax Cash Fund. Another 11.7 percent goes to the State Public School Fund. The General Fund receives 14.5 percent. The Marijuana Cash Fund receives 1.5 percent. Local governments receive about 3.5 percent.

No single destination dominates. Education is one of several competing uses.

A system shaped year to year

And once the money reaches the state, it does not stay fixed in one place.

Marijuana tax revenue moves through the annual budget process. The same system as other state dollars.

Lawmakers decide where the money goes. Those decisions can shift.

Documents prepared for the Joint Budget Committee show the Marijuana Tax Cash Fund supports dozens of programs across multiple agencies. Allocations are revisited regularly. They are not locked in.

That flexibility is built into the system.

Where the money goes beyond schools

In fiscal year 2025 to 2026, about 124.7 million dollars from the Marijuana Tax Cash Fund is distributed across 15 state agencies.

Around 8 to 8.5 million dollars of that revenue flows annually to the Colorado Department of Human Services, according to Haysel Hernandez, Deputy Director of Communications at DHS.

A portion supports the Colorado Youth Detention Continuum, which pairs supervision with treatment services for at-risk youth. The program is built around early intervention — keeping young people from progressing further into the criminal justice system.

The Tony Grampsas Youth Services program gets a slice of that funding too. It sends money to local organizations doing prevention and intervention work — helping kids avoid gangs, drugs, dropping out, and home situations involving abuse or neglect. 

This is actually only a small share of the funding that flows to DHS. According to the Joint Budget Committee MTCF memo, they received over 58 million that covers many other services and appropriations. 

Department officials said reductions would likely mean fewer services, reduced capacity, and a higher likelihood of youth moving further into the system.

Housing receives a relatively small share.

Per Kelly May, Communications Manager at the Department of Housing, DOH got around 1.5 million in marijuana tax revenue during fiscal year 2025–26. Of that, about a million went to housing programs — rental help, affordable housing grants, and recovery housing.

Officials pointed out the amount changes depending on revenue and what lawmakers decide each year.

A changing revenue picture

Colorado’s marijuana tax collections hit their high point back in 2021, topping 423 million dollars. Since then the numbers have slid — prices fell, more players entered the market, and the revenue just hasn’t kept up.

Earlier this year, lawmakers looked at a proposal to increase marijuana and alcohol taxes to help pay for a new mental health hospital in Aurora. House Bill 26-1301 would have put a tax increase to voters, with the money going toward building and running the facility. 

It didn’t get traction, and part of the hesitation came down to exactly what you’d expect — lawmakers weren’t thrilled about banking on a revenue source that’s already trending downward.

Meanwhile, the industry is doing some reshuffling of its own. In March, Vireo Growth wrapped up a deal to take over 45 dispensaries across Colorado and New Mexico, 24 of them here in Colorado. It’s part of a bigger pattern — companies merging and consolidating as margins tighten and the market gets more cutthroat.

The revenue source is still there. It just is not growing the way it once did.

Why the impact feels smaller than expected

The money is not disappearing — it is being divided across multiple uses.

Marijuana tax revenue doesn’t flow to a single destination — it gets divided among education, human services, housing, public health, and several other areas.

Education claims the largest share, though much of that money comes with strings attached, restricted to construction or designated purposes. Only a smaller portion makes its way into general school finance.

At the same time, other programs rely on those dollars to maintain services.

Colorado’s marijuana tax system is operating as designed.

But the outcome may not match what many voters expected.

The question is not where the money went.

It is whether the system was ever designed to deliver what many voters thought they were getting.