It’s a mere coincidence, but just as West Virginia lawmakers are struggling through a special session to figure out how to plug a $270 million hole in next year’s budget, the non-partisan Tax Foundation has released a study showing where states can find millions of dollars in new revenue—legalized marijuana sales for recreational and/or medicinal purposes.
“A mature marijuana industry could generate up to $28 billion in tax revenues for federal, state, and local governments,” the Foundation reports.
Alaska, Colorado, Oregon, Washington and the District of Columbia have all legalized pot sales and more states are thinking about it because of the money and the changing mores about marijuana. The Tax Foundation reports tax collections in Washington and Colorado—the only two states that have had legalized sales for an extended period of time–have exceeded expectations.
Colorado taxes pot three ways: a 2.9 percent general sales tax, a special 10 percent tax on marijuana sales and a 15 percent excise tax on marijuana at the wholesale level, and the money has been pouring in. Colorado now collects more taxes from pot than alcohol.
The Denver Post reported that Colorado collected $135 million in taxes and fees from nearly $1 billion in marijuana sales in 2015. “These are amazing numbers, especially on the revenue side,” Steve Fox, who helped draft the pot-legalization amendment, told the Post.
Washington state collected nearly $70 million in taxes from pot sales last fiscal year, nearly twice what was projected. However, sales have started to slow since neighboring Oregon began legalized pot sales last fall. That’s reminiscent of when West Virginia legalized additional forms of gambling before surrounding states, providing a revenue windfall that is now declining.
Citizens Against Legalizing Marijuana (CALM) argues states should not be tempted by the money, even if a portion of the revenue is dedicated to popular services such as public education.
“The idea of drugging for education certainly is a provocative one for any pot smoker: every joint you smoke is helping some poor kids in school,” said CALM in a recent post on its website. “Sadly, this is a deluded idea that has no basis in reality.”
It’s difficult to imagine the West Virginia Legislature giving any serious thought to pot legalization. The more conservative House of Delegates would only pass the “brunch bill” legalizing Sunday morning alcohol sales if a county referendum provision was attached.
But other states are not so squeamish. At least 20 states will have some form of marijuana legalization measure on the November ballot. The Tax Foundation estimates that “If all states legalized and taxed marijuana, states could collectively expect to raise between $5 billion and $18 billion per year.”
That’s a temptingly large pot of money for states that are hard up for another steady stream of revenue.