Jeffrey Miron examines early data on marijuana taxes in Colorado:

In my 2010 Cato White Paper, I predicted that full legalization (federal and state) would generate roughly $55-60 million per year for Colorado.

Now just released data from Colorado for January, the first month of fully legal marijuana sales, show about $2 million from recreational marijuana and about $3.5 million for medical-plus-recreational marijuana. The latter figure implies annual revenues of about $42 million.

This January figure may turn out to be misleading. On one hand, the industry could grow over time, boosting revenues. On the other hand, initial hoopla over legalization may have inflated January sales. And, longer term, sales in Colorado could decline if other states legalize or medicalize.

Sullum expects the tax revenue to grow for several reasons:

1. A relative handful of recreational pot stores opened for business in January.

2. Thanks to various artificial restrictions on supply, shortages were common.

3. After the first harvests of marijuana from plants grown especially for the recreational market, legal cannabis will be more plentiful.

4. Current cannabis consumers who were repelled by lines, shortages, and high prices will start switching from black-market dealers to legal outlets as the supply expands and prices fall.

5. After the initial adjustment period, new consumers will start venturing into the state-licensed pot shops.

Kyle Chayka looks at where the tax money will go:

Under the new recreational cannabis law, the first $40 million earned through the excise tax will go toward building new schools in the state. With the governor’s proposal, the remainder of the revenue will be funneled into educational programs around marijuana, “creating an environment where negative impacts on children from marijuana legalization are avoided completely,” Hickenlooper wrote in a letter to the budget committee.