Rolling in It: Washington Surpasses $3M in Marijuana Tax Revenue

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For residents of Washington, the color of money and the color of now-legalized marijuana is giving a whole new meaning to the the nickname “the Evergreen State.” Though Colorado got a head start on the sale of recreational cannabis and its associated products to the general public, Washington has quickly picked up steam. In fact, two months after allowing retail locations to open their doors, the state has made more than $3 million in taxes from marijuana sales, generated from more than $12 million in overall revenue, according to the Washington State Liquor Control Board, which oversees the industry.

Perhaps the most important thing that can be taken away from Washington’s $3 million mark is just how much potential revenue governments can potentially make by ending prohibition. There are only a handful of legal marijuana retail shops that have opened across the state, and many people still don’t live within a reasonable driving distance of any of them. As the market continues to grow, more shops open, and suppliers are able to keep stores stocked with product, the amount of tax revenue that the state could end up making is staggering.

Three million dollars in a little over two months of sales is not too shabby, and surely a welcome addition to the state government’s budget. The problem remains, however, that that sum could easily be much higher if the industry was allowed to flourish.

The Liquor Control Board runs a fairly tight ship over the marijuana industry in Washington, more so than the regulatory body that oversees the markets in Colorado. Due to what many think is regulatory overreach, entrepreneurs in the state have struggled to keep up with demand, leading to long-term shortages of product and ultimately closures of the few stores that have opened so far.

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Naturally, things will find an equilibrium at some point, as more stores open and suppliers are able to keep up with the public’s demand — which also should slow down once the novelty of buying marijuana in a store wears off. As a result of the new industry opening, the rest of us get to sit back and watch the free market work in a true demonstration of how supply and demand function.

There are still many unseen benefits that haven’t been taken into account yet from Washington’s voter-initiated end to prohibition. Many jobs have been created and added to the economy, small businesses have sprung up, and an untold number of people – who were previously operating on the black market and in the shadows —  have been able to emerge and engage in the economy in a measurable way.

As with anything, though, there are some who are threatening the entire system.

One would-be marijuana entrepreneur who planned on opening a retail shop in the Tacoma suburb of Fife along the I-5 corridor took the city to court after it did not allow him to open up his business as planned. This has been an issue across the state, as many cities have passed bans on marijuana businesses, and many others have moratoriums or outright bans on medical marijuana access points. The legality of those bans had been in question until a judge ruled that cities do, in fact, have the right to ban marijuana businesses.

So one city won a single court case, effectively banning a retail store from opening. Big deal, right?

Well, it could be. In fact, the case looks to go straight to the Washington State Supreme Court, where it could ultimately threaten the system. The judge presiding over the case, Pierce County Superior Court Judge Ronald Culpepper, did not comment on the apparent conflict between state and federal law, and instead kept his ruling limited to the case at hand, according to the Puget Sound Business Journal.

By banning sales in state-sanctioned retail stores, the city of Fife is pushing marijuana exchanges back onto the black market. It also raises the question of whether the city should see any benefit from the tax revenue being generated under the legalization law.

Fife is hardly the only city looking to ban marijuana shops, and cities should be able to have a say in what happens within their limits. We’ll have to keep an eye on the case to see where it ends up.

Regardless of what’s happening in small municipalities, the state of Washington is — and should be — excited about the extra $3 million in the budget that wasn’t there a year ago. Perhaps it can be a catalyst to improve the system and give the whole market a shot in the arm by letting off the reins?

Either way, Washington looks poised to benefit big time in terms of tax revenue from ending the prohibition of marijuana. Other states, if they aren’t already, should take notice.

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