Want a glimpse into the potential tax windfall that could come with large-scale marijuana legalization? Take a look at the existing medical marijuana programs across the country.
Here are estimates of what different state programs make in tax revenue each year:
Twenty states and the District of Columbia have passed medical marijuana laws, but not all states collect sales tax. In some states, the programs have yet to fully launch or officials haven’t created estimates of tax revenue.
Still, the documented tax gains from medical marijuana could help convince other states to join the club.
A ballot initiative in Florida this November, or instance, will give voters a chance to amend the state constitution to legalize medical marijuana for people with “debilitating diseases.”
If the measure is successful, it will open the doors to a potential medical marijuana market in the nation’s fourth most-populous state, which is home to 19.5 million people. The state with the most residents, California, brings in between $59 million and $109 million in estimated tax revenue from medical marijuana sales each year.
The medical pot earnings also give you an idea how states like California could benefit from full-fledged legalization. Right now, California has one of the more liberal medical marijuana laws in the country, but full legalization for adult use would definitely mean a spike in tax revenue.
A fiscal analysis of marijuana legalization by the California attorney general’s office found that it would save hundreds of millions in enforcement dollars and gain hundreds of millions in tax revenue.
Look at Colorado. During the first month of its legal weed program this January, the state brought in $2.9 million in tax revenue for recreational and medical pot. That’s six times what Colorado would have collected for its medical marijuana program during an average month last year.
And none of this takes into account the various licensing and registration fees that states charge buyers and sellers.
In many states, these fees are used to cover program-related costs or for education around substance abuse. But there’s usually money left over.
Michigan has made some big bucks that way. The state doesn’t tax its medical marijuana sales, but the various fees associated with the program not only covered administration costs in the 2012 fiscal year, but also led to a $6.3 million surplus.
Tax revenue isn’t usually part of the pitch that pro-legalization activists use in their campaigns — it’s more about the medical benefits and public support for policy change. But states are collecting millions in tax revenue, so it’s an important part of the equation.
Ted Hesson was formerly the immigration editor at Fusion, covering the issue from Washington, D.C. He also writes about drug laws and (occasionally) baseball. On the side: guitars, urban biking, and fiction.