Should States Still Expect a Big Payday From Legalizing Marijuana?

Source: Justin Sullivan/Getty Images

Justin Sullivan/Getty Images

If new economic forecasts are to be believed, the people of Washington state could soon be rolling in the green.

The first few months of tax revenues from the sale of legalized marijuana in Washington have brought in roughly $1 million per month so far, with only a handful of stores open and most of them spread few and far between. Those numbers have shown enough promise that economists are now forecasting a potential windfall over the next few years, earning the state a potential $636 million by 2019. That figure comes from the Economic and Revenue Forecast Council, according to, a Seattle-based news site.

Though things have gotten off to a sluggish start, the same forecasts suggests the state could see as much as $25 million added to the budget by July of next year, roughly one year after retail sales officially started. That would mean the marijuana market would roughly double sales over the next nine months or so, which isn’t completely out of the question given how few stores have opened thus far.

By the middle of 2017, Spokane-based newspaper The Spokesman Review reports that the state could see $200 million after three years of market activity, which would require a dramatic uptick in both production and retail sales. The money — though welcomed with open arms by legislators — won’t have much impact on helping solve current budget shortfalls for the state, however. When Washington passed their legal marijuana law, the bill laid out what programs would benefit from sales tax revenues, so the state’s general fund, which pays for numerous state projects, won’t see any benefit.

The forecasts are promising, but it’s really unknown as to whether they hold significant weight at this time. Production and sales are expected to go up as time goes on, but nothing is certain. “Whether those (projection) numbers are high or low, we don’t have any way to know,” economist Steve Lerch told The Spokesman Review.

What is certain is that the state has more resources to draw from, and people are no longer going to jail for petty drug crimes — both of which are undoubtedly positives.

Source: Getty Images

Source: Getty Images

Colorado, having gotten a six-month head start on Washington in retail marijuana sales, has so far disappointed analysts, which may have some in Washington worried about their own economic forecasts. Stateline, a news service of the Pew Charitable Trusts, reports that Colorado brought in roughly $19 million in taxes between January and the beginning of July, which is only 46 percent of what was predicted by the Colorado Legislative Council before sales began.

Disappointing for sure, but the state still has millions of dollars that it didn’t before, and would have likely ended up circulating on the black market instead. “We believe the figures we’ve seen come out of these two states so far have been overwhelmingly positive, especially when contrasted with the previous policy of prohibition,” Erik Altieri of the National Organization for the Reform of Marijuana Laws told Stateline.

He was countered by a more pessimistic take on the situation by Calvina Fay of the Drug Free America Foundation, who says that the revenues coming in aren’t enough to offset the societal costs of legal cannabis. “If you look at alcohol and tobacco, at a national level, we are not raising enough in tax revenues to cover the societal costs related to those two drugs,” she said. “Why would we think marijuana would be any different?”

Of course, marijuana doesn’t have the societal costs that both cigarettes and alcohol present. Between 2009 and 2012, cigarettes cost society $289 billion, and kill 480,000 people a year on average. Alcohol use cost the U.S. $223.5 billion in 2006 alone, and the resulting healthcare costs are astronomical.

Marijuana? So far it hasn’t killed anyone, and the tally of how much economic damage it does in terms of healthcare costs and productivity aren’t really available yet, but it’s likely minuscule in comparison.

Source: David Ryder/Getty Images

David Ryder/Getty Images

For Colorado, the numbers have been disappointing. Washington is still a work in progress, but forecasters are optimistic. So what kind of effect do these numbers have on those watching across the country? It’s not entirely clear, but the millions being generated is no doubt enticing.

A handful of states are set to vote this November on legalization bills of their own, including Alaska and Oregon, as well as Washington D.C., Florida, and Guam will vote on medical marijuana bills. Polls indicate that all of them are expected to pass, according to Vox. “Public support for ending marijuana prohibition is at an all time high, and people can sense that change is inevitable,” Mason Tvert of the Marijuana Policy Project told Fox News. “I think they are all going to pass.”

He was countered by Kevin Sabet of Smart Approaches to Marijuana, who opposes legalization and thinks the disappointing numbers from Colorado will have voters second-guessing passing any prohibition-ending legislation. “I think it’s all leaving a bitter taste in people’s mouths,” Sabet said. “Legalization in theory is a lot more pretty than legalization in practice.”

Sabet may have a point, and many people might be less enthusiastic after seeing the tax revenue shortcomings than they were previously. But tax revenue isn’t the only thing to consider. The ending of marijuana prohibition will likely reduce crime, free up legal and law enforcement resources, and bring jobs to states that pass it. The importance of these factors can’t be understated.

Though things in the short-term have been disappointing, it appears that economists still have enough faith in marijuana to forecast very large revenues for states in the near future. Even if they are off-base and the revenues fall short, states will still have a new source of revenue to draw upon, and residents will gain a little more personal freedom than they had before — something which almost everyone could agree is a good thing.

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