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In Denver, Marijuana Money Is Going Towards Fixing Homelessness

Pot Profits Help Denver's Homeless
PHOTO Dave Doe

Economics

In Denver, Marijuana Money Is Going Towards Fixing Homelessness

The Colorado city has raised the local tax on cannabis to 5.5 percent and funds will go towards affordable housing.

Homer Simpson once said that alcohol is “the cause of and solution to all of life’s problems,” and it appears one can treat marijuana legalization the same way. It depends on whom you ask — and on what day.

Homelessness and marijuana legalization is perhaps the prime example of this phenomenon at work. In 2017, Colorado Gov. John Hickenlooper declared during his annual state-of-the-state speech it was “no question” that “marijuana and other drugs — in combination with mental illness or other disabling conditions — are essential contributors to chronic homelessness.” Then, earlier this year, in response to a survey of jail inmates conducted by a law-enforcement lobby that suggested marijuana legalization was drawing homeless people to Colorado the governor said the findings were unscientific. (Other outlets, like the conservative Colorado Springs Gazette, unequivocally blame legalization for one of the nation’s biggest “homeless growth rate[s]”, with retail dispensaries drawing “abusers… here for easy access to pot.”)

What is undeniable is that Denver is ground zero for both Colorado’s homeless crisis and its marijuana industry. Since 2013, the year after the state voted to legalize adult-use cannabis, Colorado has seen an 8 percent increase in homelessness. About half of Colorado’s 10,940 homeless people live in Denver, according to HUD reports. Meanwhile, state finance department figures show that Denver accounted for $587 million of the more than $1 billion of legal cannabis sold in Colorado in 2017. So what’s the connection? According to Denver Mayor Michael Hancock (who once referred to legalization as a “scourge”), it’s a positive one.

Last week, Hancock signed into law an increase in Denver’s local marijuana tax, from 3.5 percent to 5.5 percent.

As KDVR reported, the extra money, about $15 million a year, will all go to the city’s housing fund, where it’s expected to pay for the preservation or the creation of more than 6,000 units of affordable housing, which is double what the city would have been able to afford to build without the extra cannabis cash.

Marijuana bought in Denver will now be taxed at about 25 percent, according to KDVR.com. That figure includes state taxes.

Even with the local tax, Denver cannabis still carries fewer duties than recreational marijuana bought in California or Washington, where consumers pay as much as 40 percent in taxes on legal cannabis.

Still, marijuana consumers are reacting predictably by lamenting the new high price of legal weed and openly wondering whether the new bill will drive consumers to the black market. At the same time, it doesn’t appear Hancock or Denver elected officials will pivot. They need money, and marijuana is the most convenient source.

It bears mentioning that the main driver of homelessness, according to surveys done by experts on this subject, is a lack of affordable housing. Marijuana legalization is conspicuously absent from the list. Homelessness in America became a chronic problem rather than a cyclical one sometime after 1980, when marijuana was still more than 30 years away from being legalized.

In the past, affordable housing was generally funded by the federal government. Burden has since shifted onto cities and states, who have no other choice than to raise taxes to pay for such a vital service.

Marijuana, then, doesn’t appear to hurt the plight of homeless people any further than it is already — and as soon as Denver can build the first marijuana-funded housing units, it appears certain to help.

TELL US, where do you think marijuana tax dollars should go?

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