The Colorado Senate last night voted 37 to 1 in favor of a bill that will raise the marijuana tax in the nations first legal adult-use marijuana state.

Kristen Wyatt of AP news in Colorado was there when the nearly unanimous vote took place, posting the results to her @APKristenWyatt Twitter handle, “A Senate sergeant made me stop recording but the Senate voted 34-1. Pot club bill is dead; porch smoking remains OK.”

Governor of Colorado, John Hickenlooper, indicated in January that an increase in the marijuana tax, rather than the scheduled decrease that was set in law previously, would be a good way to help fund the state’s shortfall in school funding they expect this coming year. The increase from to 15% instead of a decrease to 8% represents a effective doubling of the wholesale marijuana tax on the now legal plant, but the state “sales tax” of 2.9% will be removed. The current tax rate is at 10%. From The Denver Post:

The new dollars are earmarked for rural schools and a tax break for business owners on personal property — two purposes that diverge from the original intent of voters who in 2013 approved Proposition AA imposing taxes on recreational marijuana.

The little-noticed but significant shift in how Colorado spends marijuana tax dollars is tucked inside a far-reaching measure to eliminate budget cuts for hospitals and generate $1.8 billion for road construction with the sale of state buildings.

The move is generating concern in the marijuana industry as it raises questions about increasing illegal sales and links core state expenses to a uniquely volatile industry.

There are real concerns over the intended use for a large portion of the taxes that are included in the bill. Although the rural school funding is staying with the public education funding that the tax revenues were intended to be used on, tax breaks for business owners was never supposed to be how marijuana taxes would be utilized.

“Marijuana businesses are already generating hundreds of millions of dollars (in sales),” Mason Tvert of Marijuana Policy Project, and an original spokesperson for Amendment AA in 2012, told the Denver Post. “It seems unfair to increase taxes on marijuana consumers to cover a tax break for unrelated businesses.”

Colorado raised over $129 million in tax revenue in 2015, according to www.colorado.gov. That was part of over 10 billion in total state tax revenues for the year. What is significant is that the wholesale marijuana tax revenue is entirely intended for schools. Of all the “sin taxes” imposed in Colorado, marijuana is by far number one in revenue generation, but the only taxes earmarked specifically for schools.

2015-2016 fiscal year “sin tax” revenue in Colorado:
$55.2 million — cigarettes & tobacco excise tax
$42.6 million — liquor excise tax
$102.9 million – casino tax

Paul Seaborn, a professor at University of Denver and instructor of a course called “Business of Marijuana”, explained to the Denver Post, “It seems ironic that our state government is counseling consumers to use marijuana responsibly and yet they seem to be moving toward developing some sort of financial dependence.”