If you have no intention of using marijuana — medically or recreationally — you may watch all of the news reports, and maybe even read some of the publications about legalization and think to yourself “I really don’t care either way. As long as legalizing the substance doesn’t have a negative impact on me or anyone I care about, then que sera sera.”
According to a Gallup poll from October, around 2% of us fall into this “no opinion” group. The majority of Americans (51%), however, say the drug should be legal. This is in spite of the fact that only 38% of Americans admit to ever trying marijuana, as of last year when Gallup asked Americans of all ages.
We as a society sometimes forget about this group of individuals — those who take no stance. The strongest opinions are often the loudest, and we may hear those who are strongly “pro” this issue and strongly “against” that issue, but seldom hear about those who honestly and sincerely have no opinion, either way. These individuals either don’t want to get involved, don’t care, or they examine both sides of the issue and determine that either way will produce an equally desirable (or undesirable) result.
For the purpose of this discussion, let’s remove most of the arguments pertaining to fairness and safety from the equation (Is it safer than alcohol, which is legal? Can it cause death? Is it medically beneficial?). Remaining focused on the bottom line alone, does it make financial sense to legalize this substance?
Of course, it will bring in tax revenues for the governments that legalize it. But at the end of the day, do the financial benefits outweigh the costs for everyone — especially taxpayers? Will legalizing this substance reduce my taxes? How will it impact my wallet?
Sales and tax revenue in Colorado
There is a serious demand for this stuff. Colorado is making money off of the green substance. In July, estimates published on the Denver Business Journal project that by the end of the current fiscal year (by June 2015), Colorado will collect $60 to $70 million in pot taxes. These estimates were not that far off.
During the month December, the state posted retail sales tax revenues of $3.47 million, meaning that sales were around $35 million for that month alone. This represents an increase when compared to the month November, when sales were slightly under $30 million. For the year 2014, recreational sales exceeded $300 million in the Rocky Mountain state.
In addition to the huge tax revenue Colorado is receiving from the sale of marijuana, the state also saw savings during 2014. According to a publication by Mint Press, for the first half of 2014, counties throughout Colorado issued less than 900 marijuana-related citations and arrests. At this rate, the state will not even issue close to the 5,000 or so citations it issued last year in 2013. At around $300 a pop for each court case, we’re talking about huge savings. A New York Times article from last month found that citations at a Colorado college campus are down when compared to last year, as well.
Instead of being sold by drug dealers on the black market, legal pot is being sold in licensed shops. As of late June, there were around 2,000 licensed marijuana shops, that employ thousands of people. As time goes on, employment numbers will only increase, especially if legalization spreads to other areas of the country.
According to a report by DrugPolicy.org, “Industry Group (MIG) estimates there are currently about 10,000 people directly involved with this industry, with 1,000 to 2,000 gaining employment in the past few months alone. There is a growing need for everything from greenhouses and fertilizer to pipes and vaporizers, compounding the economic benefits.”
Accessibility and health implications
In spite of its reported medical benefits, we also have to acknowledge the drug comes along with some health risks, as well. These health risk may come along with some financial implications. Most of us are already aware of the increased ER visits by children who accidentally ingest the substance, and the health complications that users themselves may potentially face.
If legalization ends up resulting in more users over the long term, thereby resulting in more ER visits by children, increased medical expenses related to respiratory problems, and potential medical and government costs associated with the “gateway drug” factor and potential addiction to other, more harmful substances, this is a monetary cost that we should consider.
Increased medical risks may come along with corresponding taxpayer costs. For instance, we may see a rise in medical-related tax deductions and even increases in insurance premiums. According to the Maryland Insurance Administration, “[Insurance] rates are driven in large part by medical spending. Medical costs can go up for many reasons, including increases in physician or laboratory charges, more use of health care services, new technologies, prescription drugs, an aging population, and unhealthy lifestyles.”
The bottom line
The legalization of marijuana affects all of us. If nationwide recreational legalization occurs, it could have an impact on your bottom line, even if you don’t use the substance or have anything to do with anyone who does. In Colorado, TABOR (the taxpayer bill of rights) may make it so citizens receive a refund on their tax returns because of excess marijuana revenues sometime in the near future.
However, research and development costs, increased medical deductions, insurance costs, government expenditures on enforcement laws, or other costs related to legalizing the substance may change things down the road. Every state is also different, and while the financial benefits may outweigh the financial costs right now in Colorado, we can only project what will happen long-term if the substance becomes legal nationwide.