Governors don’t want to let go of the tax revenue collected from recreational cannabis sales, which helps fund school construction, local law enforcement, and social services.
Governors in states with operating marijuana retail programs are becoming dependent on cannabis tax revenue, Forbes reports.
States with legalized adult use marijuana are expected to generate $1.4 billion from cannabis-specific taxes, licenses and fees in 2017, according to the latest annual report from New Frontier Data. Taxes from all retail sales in those states are projected to reach $655 million, while $559 million of that revenue will come from sales of marijuana alone.
Colorado, the first state to legalize and implement a recreational marijuana market, collected nearly $200 million in marijuana tax revenue last year, and Washington state is now generating nearly $1 million in taxes every single day. The two states use that revenue to fund services like school construction projects, youth substance education and abuse prevention programs, law enforcement, community health centers, Medicaid, and agricultural services.
Marijuana tax surpluses have been used by Colorado and its counties and cities to establish grants to help combat bullying in schools, feed and house the homeless community, and fund college scholarships for its high school seniors.
“In an era of dwindling state resources, when we are looking to smaller governments, and an administration at the federal level that is looking to end funding to states in numerous ways, the discovered revenue from regulated legal cannabis markets can be a lifesaver to local law enforcement, substance abuse counseling and other social services,” Leslie Bocskor of Electrum Partners told Forbes.
Four states – Colorado, Washington, Oregon, and Alaska – have recreational marijuana markets in place. With the nation’s legal cannabis market projected to exceed $21 by 2021, lawmakers in states without marijuana laws in place have their eyes on that tax revenue potential. Last year, four additional states passed adult use marijuana laws and are currently in the process of establishing their regulations, and a recent market report suggests legalization could expand to all 50 states by 2021. Officials in Illinois and Pennsylvania have recently proposed or voiced support for marijuana legalization to help solve their respective budget and state revenue problems.
For the four governors in states with active marijuana markets, that tax revenue is clearly worth fighting for. After officials in the Trump administration alluded to greater enforcement of federal prohibitions on marijuana, the four collectively sent an open letter to U.S. Attorney General Jeff Sessions and Treasury Secretary Steve Mnuchin, urging them to not interfere with their adult use programs. Lawmakers are also making preparations to protect their booming industries in case a crackdown attempt were to occur. A bill pending in the Colorado Legislature would allow recreational marijuana businesses to reclassify their products as medical marijuana, and this week lawmakers in Oregon passed legislation to protect their adult use consumers.
“This tax revenue is very important to them. It’s three times as much as alcohol tax and it has quickly become entrenched in the budget,” Brian Vicente of Vicente Sederbert Law Firm, which specializes in marijuana law, told Forbes. “These governors are fighting the federal government over marijuana laws for two reasons. The first is economic, meaning tax revenue and jobs. The second reason is that it’s a better use of law enforcement’s time.”
The number of jobs created in the U.S. from the legal cannabis industry are on pace to exceed those generated from manufacturing, utilities and government, according to a recent market research report. More than 18,000 full-time jobs were created by Colorado’s legal marijuana market in 2015 alone.
“The impact is really felt at the local level. Some counties have done 20 years of infrastructure in just one year’s time,” Vicente added. “They’ve provided lunch for kids who need it. These are powerful things.”
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