re: Colorado passes $1 billion in marijuana state revenue

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Every dollar spent on mj is a dollar not spent elsewhere, so the billion dollars in revenue doesn’t represent an actual gain in a billion dollars for the state, it just means the state lost a billion dollars in sales tax revenue in other industries which is now being spent in mj shops.

We call this substitution effect in economics

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Well, also, a huge reason they're generating this kind of money is because it's illegal in a ton of other states

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Every dollar spent on mj is a dollar not spent elsewhere, so the billion dollars in revenue doesn’t represent an actual gain in a billion dollars for the state, it just means the state lost a billion dollars in sales tax revenue in other industries which is now being spent in mj shops.

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Wouldn't it still be a gain for Colorado? Spending money on something that is taxed higher vs taxed lower means they still come out ahead.

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People are buying marijuana, but they are doing so by switching their spending habits to mj from other products.

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They we're doing that before it was legal for the most part. It's not like it was impossible to find on the black market, especially in Colorado.

The additional revenue is from getting a cut of a market that they weren't getting anything from prior to legal sales.

There's of course some substitution happening, but it's not

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it just means the state lost a billion dollars in sales tax revenue in other industries which is now being spent in mj shops.

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Because a big chunk of it was already being spent on marijuana before legalization

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You can still buy marijuana illegally in Colorado to avoid sales taxes

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But most won't because of the convenience of going to a store on your schedule, that also has a wide variety of options.

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We call this substitution effect in economics

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Que? That is not what substitution effect meant in any econ class I took, it is the opposite of the income effect which both deal with pricing/demand for cheap/luxury goods.

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Every dollar spent on mj is a dollar not spent elsewhere, so the billion dollars in revenue doesn’t represent an actual gain in a billion dollars for the state, it just means the state lost a billion dollars in sales tax revenue in other industries which is now being spent in mj shops. 

We call this substitution effect in economics

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Even if the payment is redirected from one product to another, the fact that the product is worth forgoing something else is what makes it marketable.

Everything that's not a neccisity in life can ideally be called a substitute. Do I lower my CC Payment to put more down on my car? Do I go out to buy more groceries in lieu of eating at the new buffet restaurant, etc.?

And as stated, over half of that incine is probably OUT OF STATE purchases from places where the product is illegal. Just like how Amazon primarily became a juggernaut by selling products to people in places where that product may be not ne sold/short supply.

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Again, this is misleading.

People are buying marijuana, but they are doing so by switching their spending habits to mj from other products.

Every dollar spent on mj is a dollar not spent elsewhere, so the billion dollars in revenue doesn’t represent an actual gain in a billion dollars for the state, it just means the state lost a billion dollars in sales tax revenue in other industries which is now being spent in mj shops.

We call this substitution effect in economics

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This, ladies and gentlemen, is called "trying to sound smart."

Seems like marijuana would lead to the sale of more food products