Colorado, one of two states in the country to legalize recreational use of marijuana in November's locations, is not making money on pot sales.
"We'll consider ourselves lucky if we break even between the cost of regulation and the unintended consequences," Governor Hickenlooper said. By unintended consequences, he means things like an increase in pot-related crime.
The state is just working out how to make recreational pot available for sale in the state, but before it does, it faces a big problem: Colorado's law requires money raised by pot sales only to be used to build K-12 schools, Governor Hickenlooper told Business Insider during a press conference at the VCIR conference.
Washington doesn't have such a restriction and expects to generate "$1.6 billion year" on marijuana sales, he says.
Colorado officials are going to have to "go to the voters" and convince them to let government keep more of the proceeds. That's a hard sell in Colorado, which has a lot of regulations that limit government use of taxes.
On top of that, Colorado is struggling to figure how much to tax and regulate recreational marijuana sales.
Recommendations released this week by a task force include licensing fees to raise money for the state and taxing the drug at 15 percent, the highest legal level. Such high taxes are unpopular in a state where the typical state sales tax is 2.9%.
As for working with the federal government, which still says pot is illegal, Hickenlooper says that he talks regularly to Attorney General Eric Holder but nothing more.
And when it comes to pot producing an Amsterdam-like tourism industry, Hickenlooper isn't convinced. Skiing continues to be the primary driver of Colorado's booming tourism growth.
Hickenlooper acknowledged that legalization has created new small businesses and small business jobs. Until the law is changed, however, those jobs won't enrich the state.
SEE ALSO: Colorado Wants Tech So Bad, It's Setting Up Its Own $100+ Million VC Fund
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