Chairman Casey, and the rest of the committee members, thank you very much for the invitation to appear today. It's an unfortunate circumstance that I have to follow Mr. Kamin, because his comments are largely reflective of the ones I will make. Hopefully, you'll view that as sufficient evidence of our agreement on many of the different trends he has indicated.
I'll start by giving you a bit of my background, which I think is a bit unusual. After I finish my presentation, if you have questions, I'd be happy to address them. I have an undergraduate degree in accounting from the University of Colorado Boulder and a masters in business administration from the University of Chicago in Chicago, Illinois. I'm a businessman by background. I'm not a lawyer; I'm not a regulator. But I bring a unique perspective from the governor's standpoint of being able to take a balanced approach in emphasizing public health and public safety at the same time and looking into the realities of what the business market requires as this industry continues to grow and become more legitimate within our state confines.
I've been in the role for a total of of five weeks, so if I get some details wrong or answer a question incorrectly, I'm sure Mr. Kamin will let me know and I'll beg your forgiveness. Having said that, I will mention that I'm a quick study, otherwise I would not have accepted your invitation to come here today.
As to my background with the Department of Revenue, I'm in charge of four businesses for the state: the Colorado lottery, the division of taxation, the division of motor vehicles, and the enforcement division. The enforcement division has five specific enforcement areas: alcohol and tobacco, gaming, horse racing, automobile dealerships, and the marijuana enforcement division. For the total department, all four businesses account for approximately $12 billion in revenue for the state, which is about 50% of the state's annual income, and the marijuana enforcement division accounts for approximately $200 million of that $12 billion. To emphasize Mr. Kamin's point, while this is an important industry within the state and takes up quite a bit of my time and that of my colleagues, the reality is that the economic incentives for this industry are relatively minimal.
I'll reflect on comments our governor made at the time our initial amendment was passed. We had medicinal marijuana approved via amendment 20, and our citizens had to vote on this state constitutional amendment in order to allow it. At the time, our governor was an outspoken opponent of the legalization process. Nevertheless, we had retail marijuana approved in 2012 and implemented in 2014. This was again against the governor's wishes. Two years later, his remarks would become a bit more neutral. At the time it was legalized, he would have said that the headache of implementing the necessary regulation was not worth the additional tax revenue. More recently, he has stated he believes that the experiment is actually working. The tax revenue is nice to have. Whether it justifies the work that went into creating it, we don't yet know. The people of Colorado spoke, and it was our responsibility to uphold the law they put into our constitution.
There are three segments to the marketplace in Colorado. We have what we consider the black and grey market—that's the criminal segment. We have the private citizen segment, which includes caregivers and home growing. We also have the commercially licensed regulated segment, which is the segment that falls under my marijuana enforcement division, where my expertise lies. I can speak to the other two on an anecdotal basis, but I have no expertise there. I will, however, speak to Mr. Kamin's comments that diversion largely appears to be coming from the unregulated spaces, whether from the black and grey market directly or from the private citizen segment feeding into the black and grey market. Hopefully, I can answer some questions around the limitation on plants that you have in place in the home grow market, and I will tell you I think that's a wise step if you consider going forward with legalization.
To give you a sense of the size of the market, I act as the state licensing authority for the State of Colorado, which means that any business or employee wishing to enter this space has to come through my department, the marijuana enforcement division. They have to pass an FBI background and criminal check, and they have to go through a background screening process to make sure their finances are clean and that there is not a criminal enterprise supporting them.
There are a total, as of September 1, 2017, of approximately 2,900 licences. Those are split relatively evenly between 1,500 licences in the medical space and 1,388 spaces in the retail space. That is a key differentiation, as I'm sure you guys are aware.
I've listed the key stakeholders that we've identified as we've gone through the different iterations of our legalization process and through our continued regulatory process. We believe, very strongly, in encouraging a collaborative process. That's true within our state; it's true outside of our state, by working with the three other states that have legalized marijuana since we came on board, and also at the federal level working with our Department of Justice and the other entities that are impacted by the states that have legalized it on a recreational basis.
In addition, and candidly and more importantly in my mind, we work very closely with the public, whether it's the operators in the space, the businesses that are running their operations; the consumers who actually go out and purchase the product; and health professionals, most importantly in my mind.
From our standpoint, the way that we look at this marketplace is that we focus on public health and public safety number one. Those absolutely have to be the key defining hallmarks. First, it's the right thing to do. Second, it has a heightened sense within our state because of the fact that it is not legalized at the federal level. Third, it's important to us to make sure that the citizens of our state are healthy and that they keep within the laws such that we don't allow them to get into trouble that they otherwise wouldn't be able to be.
The key stakeholders that we interact with on a regular basis are the state legislators. I will very clearly point out here that as an administrator of the government, I do not view it as my role or responsibility to establish the laws. Our state legislature does that, much as your body does for your country. It is my job to take the laws they establish and to interpret them and put them into effect without political bias to any extent that we can to make sure that we are upholding the will of the Colorado people as well as the Colorado legislature.
The next group that I would point to are the public health and public safety individuals. The third group would be physicians. Fourth would be legal/ law enforcement. Fifth would be the marijuana industry, and sixth would be the consumers.
The challenge for my office and for the marijuana enforcement division is to try to strike a balance between public safety and public health and commercial marketability, the ability of the businesses in the industry to operate free of the burden of an overreach of government regulation but with government regulation that's necessary to protect the public health and public safety of our people. That's always a natural balance and a natural tension that's going to exist and something that we strive for at all times.
We have a highly collaborative rule-making process. As we interpret the laws that are passed by the legislature, we very much encourage all the key stakeholders whom I mentioned on the previous slide to engage in the conversation and to give us their viewpoint so that we can very much understand exactly the key points that we have to consider when we put regulations in place.
Again, public health and public safety are our absolute main focuses. We have three operating guidelines that we've looked to in implementing regulations of the space. The first is to keep it out of the hands of minors. The second is to keep it out of the hands of criminals. The third is to keep it out of other jurisdictions.
The way that you guys are thinking about legalizing it on a federal basis, I don't know that keeping it out of other jurisdictions is germane to this conversation, but keeping it out of the hands of minors and criminals, I think, is very germane. I'm happy to answer any questions that you have on that front, particularly as it relates to protecting minors and keeping it out of their hands.
We think that having a public message department that actively goes out and advertises our concerns to the marijuana marketplace is important. On that front, we have two main messages: number one, what's good to know; and number two, what's next? The reason why we focused on those two messages is that it's important for our minors to understand what concerns and potential health complications are associated with using this product at an early age. What we have found, through market studies, in regard to what's next is that what prevents our minors from using this product illegally or inappropriately is their focus on their key goals for the rest of their life. If we can communicate those messages succinctly and importantly to our young individuals in our community, we believe that it has a strong impact on whether or not they use. We believe that the data supports the fact that the current and historical use amongst our general population and our minor population in the State of Colorado is below the U.S. average and has shown a decreasing trend over the last couple of years. We believe that supports the fact that we have a strong and thoughtful regulatory environment in place.
With that, I'll turn over the rest of the time to you guys.