Marijuana Tax Revenues Entice States Where Pot Legalized

Friday, 29 Mar 2013 09:41 AM

By Megan Anderle

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As more states take steps to legalize marijuana to varying degrees, lawmakers across the country are considering how to tax the drug so states can turn a profit.

Officials in states like Maine, California, and most recently, Colorado and Washington, are enticed by potential revenues from marijuana taxes and are discussing how they could be collected.

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One Colorado congressman estimates a tax that puts a $50 levy on top of each ounce of marijuana, an amount which can sell for between $200 and $400, could bring in as much as $100 million in potential revenues for the state alone.

“I’ve seen some estimates in the high tens of millions, as much as $100 million for [COLORADO],” Rep. Jared Polis (D-Colo.) told Politico. "Money like that could make a big difference."

A tax like that would put a “substantial dent in needed school improvements, particularly in poorer districts,” the lawmaker said.

In groundbreaking votes, Colorado residents approved “Amendment 64,” in November, allowing people 21 and older to possess, consume, gift and grow up to one ounce of marijuana, and Washington voters approved “Initiative 502,” which makes small amounts of marijuana and marijuana products legal for people 21 and older. Washington's measure also established an excise tax on those products of 25 percent, according to the Daily News.

Despite that lawmakers realize implementing the laws will be hairy due to conflicting federal laws that prohibit the substance, officials are working on a plan for how to tax the drug.

A task force in Colorado proposed two ballot measures earlier this month, which residents could approve or vote down, under which recreational marijuana would be taxed heavily. The measures will go before the state legislature, where lawmakers will turn the proposals into a bill.

One option would impose a 15 percent excise tax on recreational marijuana that dispensaries and stores would pay at the wholesale level, the Denver Post reported. The other option is that buyers would be directly taxed an unspecified sales tax percentage. Additionally, recreational marijuana would be subject to standard state and local sales taxes.

There is currently a bill to legalize and tax marijuana in Maine, where pot is decriminalized, that has more than 35 sponsors in the state legislature.

“Support for changing our marijuana laws is growing as more and more elected officials realize it makes no sense to maintain a system of prohibition for a substance that is objectively less harmful than alcohol,” David Boyer, Maine political director for the Marijuana Policy Project, told the Raw Story.

Meanwhile, in California, members of the National Organization for the Reform of Marijuana Laws (NORML) believes the state could bring in well over a billion dollars, Politico reported.

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Despite these high estimates, not everyone believes the tax will yield high profits.

“This is not a cash cow that can solve anyone’s fiscal problems,” Jeffrey Miron, a Harvard economics professor and a pro-legalization speaker at the Cato Institute, told Politico. “There is a lot of exaggeration about how big the revenue can be.”

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