The rise of intoxicating hemp and its effect on Colorado’s budget
Plus: Amanda Gonzalez’s billboard and the 2026 secretary of state’s race. Emma Pinter and CD8. Remember Jon Donley.
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Forget the pandemic boom in marijuana sales — Colorado now collects fewer marijuana tax dollars than it did in 2018.
About half the country now has joined Colorado in legalizing recreational marijuana, with a total of 24 states and Washington, D.C., regulating the drug. The spread of legalization has taken a toll on Colorado’s more established cannabis market, with the wholesale price of legal marijuana falling to its lowest recorded level, according to state budget documents.
But a new analysis by Joint Budget Committee staff found that there’s another factor to blame for the decline of Colorado’s marijuana industry: the rise of intoxicating hemp.
In 2018, Congress legalized hemp through the federal Farm Bill, a change that was aimed at allowing its use for things like textiles, not recreational drugs.
There’s a limit on how much THC can be present in legalized hemp. But the federal changes have nonetheless resulted in the creation of a $2.2 billion quasi-legal market for intoxicating hemp products, including THC-infused seltzers, brownies and gummies that are now popping up in gas stations, farmers markets and CBD stores across the country.
“You’ve put a pretty robust regulatory structure in place around marijuana, and you have this product that is sort of laughing in the face of that structure,” Craig Harper, the JBC staff director, told lawmakers at a budget hearing last week.
California’s governor recently issued an emergency order banning intoxicating hemp products, while Colorado in 2023 passed a bill to restrict them to licensed marijuana sellers.
State attorneys general, including Colorado’s Phil Weiser, are pushing Congress to put stricter limits on hemp, saying their own efforts to crack down on the industry have been stymied by legal uncertainty.
But in the meantime, Colorado’s legal marijuana sellers are seeing less consumer interest in their highly regulated products.
Marijuana sales — and the tax revenue they generate — peaked in Colorado in the 2020-21 budget year, when the state collected $424 million in sales and excise taxes. That fell 41% to $248 million in the 2023-24 budget year.
For years, budget officials have warned that the boom times would not last once consumer behavior returned to pre-pandemic levels. Today, however, marijuana tax collections have even fallen below what they generated in 2018 and 2019 — and it’s not clear if we’ve reached rock bottom.
The governor’s Office of State Planning and Budgeting expects revenue will finally level off this budget year, increasing slightly to $267 million, then $285 million next year. But Colorado Legislative Council Staff isn’t so sure; they’re projecting tax collections to fall again this budget year to $242 million, before ticking up to $250 million next year.
Not all of that money winds up in the Marijuana Tax Cash Fund, either. In last year’s budget, lawmakers had about $131 million to spend on things like health services and law enforcement from the fund. The rest gets transferred to schools and local governments.
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WHAT IT MEANS FOR THE BUDGET
Marijuana taxes are among the few sources of state funding that can grow without restriction in Colorado, because voters exempted them from the Taxpayer’s Bill of Rights revenue cap.
So in a year where the TABOR cap is going to force the legislature to make around a billion dollars in spending cuts, the marijuana tax downturn stings.
Last budget cycle, lawmakers already had to cut services funded by marijuana taxes —including a $20 million payment to BEST, a public school construction grant program that the JBC voted to delay until next budget year.
Expect more cuts in 2025.
Gov. Jared Polis has proposed cutting the BEST payment again, but even that might not be enough to balance the marijuana fund budget. As of now, JBC staff projects that lawmakers must cut an additional $19 million in marijuana spending from Polis’ budget request to avoid dipping into the fund’s reserves.
And that’s under the more optimistic forecast from the governor’s office. If the legislative staff forecast is closer to reality, lawmakers could need to cut more than double that amount.
WHAT TO WATCH THIS WEEK
THE BIG STORY
A county clerk, a billboard and the looming 2026 Colorado secretary of state’s race
Jefferson County Clerk Amanda Gonzalez’s office spent $7,200 on a get-out-the-vote campaign that included a billboard with an advertisement that prominently featured her picture and name.
Gonzalez’s office said the campaign, launched in mid-October, also included social media posts, community events and flyer distribution. The billboard alone cost $4,000.
The office said it found before launching the campaign that ads featuring Gonzalez, a Democrat, were high performing. Gonzalez’s spokeswoman said that reinforced national guidance and research showing that local officials are the most trusted messengers for election information and ads featuring human faces are the most effective. The social media posts her office made also used likenesses of Commissioners Lesley Dahlkemper and Tracy Kraft-Tharp.
Commissioner Andy Kerr was on the ballot running for reelection this year, and therefore did not participate. And for good reason.
It likely would have been illegal for Kerr to appear in the ads. A law the legislature passed in 2023 prohibits Colorado election officials from using state or federal money to pay for advertisements that prominently feature a person who is a declared candidate for federal, state or local office.
That provision in the law was added in response to ads fighting election misinformation run in 2022 by Democratic Secretary of State Jena Griswold’s office that prominently featured her as she was running for a second term. Her predecessor, Republican Wayne Williams, who was running at the time to be the Colorado Springs mayor, also appeared in the ad.
Gonzalez isn’t a declared candidate for any office, but she is rumored to be interested in running for secretary of state in 2026. Democratic state Sens. Steve Fenberg, Jeff Bridges and Jessie Danielson also are in the mix, as is Gonzalez’s predecessor, former Jefferson County Clerk George Stern, another Democrat.
Gonzalez declined to talk about her interest in running for secretary of state. But in a written statement, she defended the billboard as part of her office’s get-out-the-vote efforts.
“It has always been my goal to ensure that every eligible voter is able to cast their vote and have it counted, because I believe our democracy is stronger when everyone participates,” Gonzalez said.
The office argued the campaign was aimed at helping boost early turnout, which saves the county money by mitigating logistical challenges that would have required additional staffing.
“By encouraging early voting, we saved taxpayer dollars and posted results faster,” Gonzalez said.
But the billboard featuring her image and name didn’t encourage early voting. It simply said: “By mail, by drop box, or in-person: Vote by November 5.”
Sarah McAfee, a spokeswoman for Gonzalez, said the Jefferson County Clerk and Recorder’s Office finds “that telling voters specifically to vote early can create questions about why … however, simply reminding them of the deadline spurs action to get it done.”
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THE POLITICAL TICKER
8TH CONGRESSIONAL DISTRICT
Add Adams County Commissioner Emma Pinter to the list of Democrats who may run in Colorado’s 8th Congressional District in 2026.
Pinter told The Colorado Sun on Monday that she was recruited to run in the district in 2022, but ultimately decided to throw her support behind then-state Rep. Yadira Caraveo, who won the race that year. Caraveo was unseated by Republican state Rep. Gabe Evans this year.
Caraveo hasn’t ruled out running in the district in 2026 — and neither has Pinter.
“I think we are all still processing Nov. 2024 and the election’s implications for our community,” Pinter said in a text to The Sun. She didn’t provide a “yes” or “no” answer to the question of whether she’s interested in running for the seat in 2026.
SEVERANCE TAXES
In a bid to close the state’s budget gap, Gov. Jared Polis has proposed sweeping $10 million in severance tax dollars into the general fund. A budget-balancing tactic lawmakers deployed following the Great Recession, moving severance tax dollars into the general fund allows the state to spend that money on state services rather than the grant programs typically funded by the tax on oil and gas extraction.
The one-time change requested by Polis is sure to rile local governments, who have long received a slice of severance tax money as compensation for allowing drilling in their communities. But in a memo presented to lawmakers Monday, Joint Budget Committee staff suggested going a step further and making permanent changes to the fund.
One idea offered to the JBC: take $10 million a year in perpetuity so the state can spend it on ongoing expenses. Another suggestion: set an annual cap on severance tax revenue and keep any amount above that for the state to spend. Severance tax collections can vary wildly from one year to the next, but the state has generated an average of $160 million a year since 2000, according to JBC staff.
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BLAST FROM THE PAST
It’s been a long time since a state senator resigned so soon after being elected
It’s been nearly 40 years since someone elected to a four-year term in the Colorado Senate has resigned soon after their victory, as Democratic state Sen. Chris Hansen plans to do.
In 1987, Republican state Sen. John Donley resigned after being reelected to the Senate in 1986. His Senate District 16 seat based in Weld County was filled in 1988 by then-Republican state Rep. Tom Norton through a vacancy appointment.
Vacancy rules require that when there is a vacancy in the state Senate, the district be up for grabs in the next general election. But usually a senator resigns more than halfway through their term, so the next general election happens when the seat is up for grabs for a four-year term anyway.
However, when a senator resigns less than halfway through their term, the next general election comes in the middle of the four-year term, meaning the election for the seat is for just a two-year term. That prevents the cycle of half of the Senate’s 35 seats being up for grabs every two years from being thrown off.
So in 1988, Norton had to run to finish the two years remaining in Donley’s term.
He won, then Norton ran again to represent Senate District 16 in 1990, when he was elected to a full, four-year term in the chamber. He was reelected in 1994 — before legislative term limits were fully in effect. He served as president of the Senate from 1993-1998.
Hansen’s coming resignation will create a similar vacancy situation.
The Denver Democrat was reelected Nov. 5 by an overwhelming margin. He plans to step down from his seat Jan. 9, a day after the 2025 lawmaking term begins, as he becomes CEO of the La Pata Energy Association.
Hansen’s seat will be filled by a Democratic vacancy committee, but because he is leaving so soon after winning reelection, his replacement will have to run in 2026 for a two-year term if they want to continue representing his Senate District 31 seat.
If the replacement runs and wins in 2026, they would then be eligible to run in 2028 for a four-year term before they are term-limited. They would still get eight years in the Senate, just in a roundabout way.
VACANCY DOMINOES
Shaneis Malouff, chief of staff at the Aurora Higher Education Center, plans to seek a vacancy appointment in House District 6 should state Rep.-elect Sean Camacho of Denver be selected to fill Hansen’s seat.
Katie March, a former legislative aide who ran unsuccessfully to represent the district in 2022, is also likely to pursue a House District 6 appointment, should a vacancy arise.
THE BIGGER PICTURE
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