Gray Money

The term, “Gray Money”, applies to cash based businesses. An example is the coin operated business like arcades and juke boxes. They collect the coins, count them and then decide how much they should report as income. Since everyone is reporting about half you cannot compete in the business if you report all your income. You must either cheat or find another business. In the news today it was reported that taxes collected from the pot businesses in Colorado were coming in at about half the estimates. Since this is a cash business, I wonder where the people who collect taxes have been living. Did they account for the gray money when they put out their estimates or did they over estimate on purpose to get the law passed?