The marijuana money for Colorado schools shrank. A 2025 law decided where the rest goes.

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

For years the story about Colorado’s marijuana taxes and its schools ran in one direction. Sales climbed, revenue climbed, and a share of it went to a fund that helps districts repair aging buildings. When sales started falling, the natural assumption followed. Less marijuana money, less for schools.

That assumption is incomplete, and the reason is buried in how the money is structured.

The marijuana excise tax that flows to school construction has dropped to about the level the state constitution singles out for protection. 

The first $40 million collected each year is reserved for construction before anything else can touch it. Marijuana collections are now close to that line, which means the protected piece is most of what’s left. 

At the same time, a law passed in 2025 has started steering other money in the same fund toward school finance instead. The decline everyone has been writing about has mostly run its course where school construction is concerned. What happens to the fund now is being shaped less by the marijuana market and more by decisions made at the Capitol.

The protected dollars

Colorado voters legalized recreational marijuana through Amendment 64 in 2012. That measure also required the legislature to create an excise tax on wholesale marijuana and wrote a specific instruction into the constitution. The first $40 million raised by that tax each year would go to school construction. 

A year later, voters approved Proposition AA, which set the excise rate at 15 percent.

The wording of Amendment 64 is precise. The constitution protects the first $40 million of whatever the excise tax brings in. It does not promise the tax will raise $40 million. In the early years, when collections came in light, the construction fund received less. As long as the tax produces more than $40 million, the first $40 million is locked in for construction and the rest can be directed elsewhere.

For one year, House Bill 20-1418 diverted the excise above the first $40 million to school finance as a budget-balancing move during the pandemic. Since the 2021-22 fiscal year, all of the excise tax, not just the protected $40 million, has flowed back to the Public School Capital Construction Assistance Fund.

The fund is the account behind the Building Excellent Schools Today program, known as BEST, which the legislature created in 2008 to award construction grants to public schools, with priority for projects that address health, safety, and security.

The protected $40 million is written into Section 16(5)(d) of Article XVIII of the state constitution.

Collections have now fallen back toward that protected line. In fiscal year 2024-25, the excise tax sent about $40.1 million to school construction, according to Legislative Council Staff, barely above the protected amount. 

In the estimate Joint Budget Committee staff used to build the 2026-27 budget, marijuana funds into the construction account come to about $42.1 million. 

When RMV reported on the program in March, the projection for fiscal year 2025-26 was about $39.3 million, slightly under the line.

The takeaway is narrower than the headline number on the marijuana decline suggests. 

The excise contribution to school construction has compressed to roughly the amount the constitution protects, give or take a couple of million. The money above that line, the part lawmakers could once redirect freely, has largely thinned out. If sales keep sliding, the construction figure can still drop below $40 million, the way it did early on. 

But the room the market once had to push that number well above the protected amount is mostly gone.

How far the market has fallen

The drop itself is real and well documented. 

Marijuana tax revenue peaked at $424.4 million in the 2020-21 fiscal year, according to Legislative Council Staff. By the 2024-25 fiscal year, it had fallen to $231.1 million, a decline of 45.5 percent from the peak.

The monthly figures from the Department of Revenue show the slide continuing into 2026. Marijuana sales for February 2026 totaled $97.7 million, down from $105 million in January and below the $100 million mark. Tax and fee revenue for March 2026 came in at $18.1 million. The calendar-year total through March stood at $56.2 million.

The politics of the revenue have run ahead of the math. In December, with annual sales nearing $1 billion, Gov. Jared Polis said “Colorado’s world-class marijuana industry drives out criminals and cartels and is supporting Colorado businesses and jobs while driving revenue for school construction.” 

The construction share of that revenue is now sitting at about the amount the constitution protects.

The cap

The bigger change to the construction fund didn’t come from dispensaries. It came from the 2025 legislative session.

House Bill 25-1320, last year’s School Finance Act, set a ceiling on how much revenue the Public School Capital Construction Assistance Fund can keep. Beginning in the 2024-25 fiscal year, total revenue credited to the fund is capped at $150 million per year, adjusted for inflation. There is an exception. If interest earned on the state’s Permanent Fund exceeds $41 million, the excess does not count against the cap. 

Revenue above the ceiling is credited to the State Public School Fund, which pays for part of the state share of school finance rather than construction.

Joint Budget Committee staff estimate that about $51.2 million will be credited to the State Public School Fund rather than the construction fund, the revenue that exceeds the cap. The figure comes from the revenue calculation staff used to set the 2026-27 school construction budget. It is money the construction fund would have kept under the rules that existed before 2025.

The effect is easy to miss because it runs counter to how the fund was sold. The excise tax that voters approved was tied to building and fixing schools. Construction was the pitch. 

The 2025 ceiling now sends tens of millions toward school finance instead, in the same years the marijuana share has shrunk to its protected core.

What it adds up to

The construction fund draws on several sources besides marijuana. The State Land Board contributes 50 percent of income and mineral royalties from state public school lands, estimated at $112 million in the same budget calculation. It carries a $40 million floor that holds even when the percentage would yield less, and it runs far above that figure. 

Marijuana works differently. The constitution protects its first $40 million but does not promise that much, and the contribution has fallen to about that level. Permanent Fund interest, lottery proceeds, and investment income round out the rest. Marijuana is now one of the smaller pieces, and the one closest to the line the constitution sets.

Put together, the picture is different from the one the decline coverage has drawn. 

The 2025 ceiling applies to the fund’s total revenue, and because the marijuana piece is locked near its protected line, the money the cap pushes toward school finance comes largely from the fund’s other sources. The school construction account that marijuana taxes were supposed to feed is increasingly shaped by formulas and limits written at the Capitol, not by what happens at the register.

When RMV examined the marijuana-to-schools pipeline in March, the finding was that marijuana revenue contributed less to total education spending than its reputation suggested. The newer numbers sharpen that. 

For the one program marijuana taxes were most directly tied to, the freely spendable surplus has thinned to almost nothing, while a separate decision quietly steers other dollars elsewhere.

The marijuana decline story has been told. This is the part that comes after it.