Brandon Leuallen, The Business Times

Amid reports that the city of Grand Junction’s marijuana revenue fell short of projections by $800,000 and that statewide marijuana revenue has declined by more than 41 percent since its peak in 2020-2021, The Business Times reached out to Melanie Trujillo, chief financial officer of Mesa County Valley School District 51, to understand how the shortfall might affect the district

Trujillo said local marijuana-sales-tax revenue does not directly fund the district and addressed misconceptions about how much and how often marijuana revenue has been distributed to the district since legalization, despite public expectations.

Since recreational marijuana was legalized, Trujillo noted funding from marijuana tax revenue has largely been supplemental, coming in the form of one-time state grants rather than ongoing support for operational costs or teacher salaries.

One of the primary sources of marijuana tax revenue for the district is the Building Excellent Schools Today (BEST) grant program. This competitive grant program, partially funded by marijuana excise taxes, also draws from other revenue streams, such as lottery funds and mostly state-land-board revenues.

“We’ve received the BEST grant a couple of times,” Trujillo said, adding the district used this funding for portions of Grand Junction High School and Orchard Mesa Middle School.

Trujillo also pointed out the grants are often matching grants, meaning districts must contribute their own funds as well. While this setup has reduced the financial burden on local taxpayers multiple times, it does not provide a consistent or reliable funding source.

Beyond the BEST grants, District 51 has occasionally benefited from other marijuana-revenue-driven grants, such as those aimed at early literacy and supporting school health professionals. Yet, these funds are not guaranteed annually and have a limited scope.

“With grants, some years you get them, other years you don’t,” Trujillo said, highlighting the unpredictable nature of this funding.

Trujillo said misconceptions about marijuana revenue’s impact on school budgets has been especially prevalent during bond or mill engagements with the community.

“When it first passed, there was that expectation by voters with the way that it was laid out by the state, that it would be a windfall for Colorado school districts, but that just really hasn’t been the case.”

The reality of marijuana-tax-revenue distribution is more complex than commonly understood. Marijuana in Colorado is taxed in four ways: a 15 percent excise tax on wholesale and retail marijuana; a 15 percent special sales tax on retail marijuana; a 2.9 percent regular state sales tax; and optional local city and county sales taxes.

The first $40 million of excise taxes is designated for the Colorado Capital Construction Assistance Fund, which funds the BEST grant program, and 12.59 percent of the state government’s share of the special sales tax goes to the state public school fund. In total, marijuana revenue allocated to schools makes up only about 1 percent of the state’s total education budget distributed through these various grants.

Locally, the City of Grand Junction projected $2.5 million in marijuana tax revenue for 2024, but actual revenue was about $1.7 million. According to the 2024 annual budget, this revenue is restricted and designated to support the priorities of the Parks and Recreation Open Space Plan. Additionally, the city will receive the regular 3.39 percent city sales tax on all retail cannabis sales. A portion of this, 2 percent, will go to the Sales Tax Capital Fund, which is specifically allocated for housing initiatives in the area.

Towns and cities have the discretion to allocate a portion of marijuana revenue to schools, while most of Grand Junction’s marijuana revenue is set aside for the new recreation center.

“I know there are some instances where the towns or cities elect to designate a portion of those sales tax for schools,” Trujillo said. “However, none of our local municipalities have.”

At the state level, marijuana revenue has been used for more than originally intended, and Colorado’s marijuana revenue has been exempt from the Taxpayer’s Bill of Rights (TABOR) revenue cap from the beginning.

According to a Colorado Sun article titled “Colorado marijuana sales – and tax dollars – are still falling. The rise of intoxicating hemp may be to blame,” lawmakers have expanded revenue allocations to as many as 21 categories.

Joint Budget Committee chair Sen. Jeff Bridges (D-Greenwood Village) explained, “In my first few years in the legislature, it was seen as, ‘Oh, that’s where you go to pay for your bills, because there’s not enough general funds.’ Now there’s a bunch of stuff in there that maybe shouldn’t be in there.”

Finally, with a $1 billion budget shortfall and Gov. Jared Polis proposing to cap BEST grant funding while districts across the state compete for limited resources, it remains uncertain how much or how often District 51 will receive marijuana revenue in the future.