Marijuana Legalization Means Big Money for New States
It’s pretty much official: Marijuana legalization is sweeping the nation. The midterm elections this year saw Oregon, Alaska, and Washington D.C. all vote to end prohibition within their respective jurisdictions, and even Guam got in on the action by voting to legalize medical cannabis. Following in the footsteps of Colorado and Washington in 2012, it’s safe to say that 2014 will be looked upon as one of the biggest years in marijuana history, with 2016 primed to be even bigger.
Much of the fuel behind the legalization movement has been provided by the activists who have been fighting for it for a long time. The issue has been, up until now, that the general public and almost all policymakers were not on board. Over the past decade, those attitudes have taken a dramatic shift, with recent Pew Research Center numbers showing that a majority of Americans now supporting legalization (52%), compared to the 45% who do not. What’s changing people’s minds? The fact that marijuana is not, in fact, the dangerous substance it has been made out to be for decades, and the promise of economic rewards from legalization.
With legalization comes an influx of jobs throughout the industry, as well as what is really helping to hook government officials and lawmakers: Tax revenues. This has also been a big part of selling the general public, as the promise of additional funds going into schools and state’s general funds seems like a godsend for those living in areas with budget shortfalls or deficits. After all, if people are buying and using marijuana from the black market either way, the state may as well take a cut of the proceeds, right?
So, with a couple new states and a city now transitioning to legal systems, what kind of financial boosts can residents from those states expect to see? Overall, there are reports that legalization could bring in as much as $3.1 billion on an annual basis from tax revenues, and save states billions more in law enforcement costs. Colorado has been seeing roughly around $30 million per month in pot sales since its retail market opened up at the beginning of the year, with Washington quickly catching up.
As far as the newbies to the scene, what can residents of Oregon, Alaska, and D.C. expect as a result of legalization?
Alaska is an outlier in many respects, not just geographically speaking. The state is home to a different bunch of people. It’s immense in size, yet sparsely populated. According to a report from the Alaska Dispatch News, more than 127,000 Alaskans voted in favor of marijuana legalization during the midterm elections, which helped pass Ballot Measure 2 into law. While the measure will treat cannabis from a regulatory standpoint more like alcohol, there is still a missing figure from the Alaskan legalization picture: An official revenue forecast. A report from the Marijuana Policy Group, however, puts first-year marijuana tax revenues at around $7 million for the first year. It’s significantly lower than other states, but then again, Alaska is a unique state with a low population, and one that is very spread out.
The state of Oregon borders Washington to the south, and has been able to witness first-hand how the legalization experiment has run its course to the north. Now that the state itself has passed a legalization measure, policymakers and residents are looking forward to enacting a law that is long overdue, in many respects. Oregon already has a fairly established marijuana culture, so legalization probably won’t be as big of a deal there as it will be in other states. There are plenty of projections for potential revenues as well, with the state’s Measure 91 instituting a 15% tax on retail sales. So, what can residents expect? According to San Francisco-based market analytics firm ArcView Market Research, first year sales could top nearly $200 million, resulting in more than $20 million in excise tax revenue. Not bad for the first year, and things would ultimately grow and prosper for Oregon’s nearly 4 million residents.
The nation’s capital really pulled a hell of a move by voting to legalize marijuana in the federal government’s backyard. D.C. presents the trickiest scenario of all the states that have legalized so far, as no one is quite sure if the law will stand after it undoubtedly comes under fire from federal lawmakers. With a new Republican-led Congress (the party that tends to be less-excited about legalization than their counterparts), there is legitimate worry that the GOP may not allow the law to hold up.
If the law is allowed to stand, there are a whole bunch of other issues D.C. is faced with. For one, it is a very small, densely-populated area, meaning that cultivation and growing would be more difficult, possibly hurting supply amounts. That would lead to higher prices, naturally, and lead many people to continue purchasing from the black market. Even so, calculations from the folks over at NerdWallet estimate the District of Columbia’s marijuana market to be valued at more than $42 million, with potential tax revenues coming in at more than $8.5 million annually. Of course, D.C. sits at the intersection of two states, and is itself its own legal jurisdiction, which could muck a lot of things up. Also, being the only bastion of legalization on the east coast so far, the city could see a huge boost in marijuana tourism as people make the trip to purchase and consume legally. Either way, D.C. is set to pull in millions in tax revenue.