One of the major issues is how in Colorado just about anyone can walk into a doctor's office or medical clinic and claim "I have chronic pain in _______ (fill in the blank) caused by _______ (fill in the blank) and marijuana helps me to manage it." They are then given a card which allows them to buy medical marijuana at a substantially lower cost then the recreational products. Why pay retail when one can get the product wholesale?
While Colorado collected far fewer taxes than it had anticipated, this may also be attributed in part to the cash-only business practices marijuana sellers must operate under at present. How easy would it be to keep a substantial portion of the business "off the books" when dealing only in cash? If Colorado were to personally "bank" all of these businesses and require only electronic transactions, my guess would be that taxes collected would shoot up pretty fast.
That said, an excise tax makes far more sense and the indirect taxation of these businesses through payroll, income and other business taxes should not be forgotten in the calculus.
That said, an excise tax makes far more sense and the indirect taxation of these businesses through payroll, income and other business taxes should not be forgotten in the calculus.
Adding the marijuana taxes to the lowered arrest and incarceration costs for minor infractions would be a more accurate gauge, would it not?
2
Unlike tobacco and alcohol illegal marijuana production will hold down the ability for States to maintain high excise taxes. Illegal production of marijuana is still far easier than illegal production of either cigarettes or alcohol, a real advantage for heavy taxation of cigs and alcohol. Eventually, the taxation of marijuana will follow more closely to everyday products. There is no way for law enforcement to distinguish between marijuana that was grown legally versus illegally. Therefore, marijuana is merely a commodity from a tax perspective, no different than a sack of groceries. Also, marijuana is extremely easy to grow and it can be grown everywhere and anywhere. So, expect marijuana to become extremely cheap and ubiquitous, and as a tax source minor at best.
1
Why does this article only consider the tax revenue and not the total fiscal impact of no longer policing, judging, jailing, and paroling people over marijuana? Undoubtedly the annual net effect of the new policy is in the hundreds of millions. So the state's budget is $27 billion, if every sensible policy reform both lowered the state's costs and increased its revenue, I think you'd find people very happy to make up 2% of the budget here and 1% there.
14
Why should the taxes be any higher than that for Alcohol! This is so hypocritical it rediculousy!
3
I'd much rather have a functioning commercial market that is regulated and taxed than either the current underground market or the DC model. The DC model makes you grow to use. That would be like making cigarette smokers grow their own tobacco. Doesn't make sense. Why is it so difficult to just have a regulated taxed marijuana industry? And as regards to budgets, I don't know how much of the $69 million that Colorado is collecting is new tax collected (wouldn't have been collected via other goods/services) but it would seem that any additional revenue would be a good thing, no?
5
Our over-bloated government can't help but to spend every penny of our tax dollars, no matter how much or from what sources.
Gasoline, casinos, cigarettes, lottery etc.
Gasoline, casinos, cigarettes, lottery etc.
5
Who in Colorado is paying for all the motor vehicle accidents, deaths, and hospital visits stemming from the use of marijuana???
Huh? Use rates have remained steady, there is no increase in social costs. In fact traffic fatalities have fallen through the floor in Colorado. They are saving untold millions on invalid arrests, wasted police resources, and court costs. Not to mention the tens of thousands of new jobs the industry has created. The hundreds of millions in economic activity it has produced. The 70 million in taxes it brought in...
10
It must be fun to be a prohibitionist. You just make stuff up and see who will believe it.
16
Can you please provide links to the deaths, accidents, hospital visits. If you mean the sensational stories such as the man who committed suicide after smoking, well that's tragic. 7 people were left out of the news that night when they died of alcohol suicide. For all the reporters digging for ruined lives from pot use, one would think trends could be established, but the salient trend is fewer arrests of non-criminals.
10
Will next week's article be on alcohol and lottery tickets, or are they accepted instruments of tax revenue, too entrenched to be argued over? You can't win if you don't play, and please give me a shooter of Grand Marnier for the drive to the anti-marijuana rally.
1
Still not chump change. For the full gain from legalization you've got to factor in savings from fewer people in jail and the enforcement funds that can go to other areas. It's still a good situation.
12
Absolutely. Direct tax revenues are only part of the story. When the costs of arresting, trying, housing and losing tax revenue from thousands of people in prison are factored in, direct tax revenue from the sale of marijuana may be the smallest piece. Oh and add in tourism revenue from folks specifically coming to Colorado because of legalization.
6
Would somebody please add the increased revenue to all levels of government from payroll taxes generated by the thousands of people that produce and distribute this stuff? Aren't they just as hard working as any other working folks out there trying to make a better life for themselves? And if anyone in my fair city were to go into one of our local dispensaries, they probably dealt with a very pleasant employee that really liked their job. Everybody wins.
1
Let us not forget that whatever tax benefits are derived from legalization the main goal of legalization is to keep people from going to prison.
11
Amsterdam profits from marijuana not by taxes directly, but by all the drug tourism. A night or two in a hotel, plus meals in restaurants ... and that's money coming into the region from other regions.
4
While you were away Amsterdam has been closing the pot cafes and prostitution dens because they are sick and tired of the badly behaved tourists!
1
Only the ones on the border with other countries. That's the fault of those countries with their oppressive, fraudulent marijuana prohibition. It creates a spring-break like atmosphere in the border towns.
Dutch drug policy experts are proud of their system of allowing possession and sale of small amounts of marijuana. They report this has successfully separated marijuana from the hard drugs - causing an aging out of the addict population.
Dutch drug policy experts are proud of their system of allowing possession and sale of small amounts of marijuana. They report this has successfully separated marijuana from the hard drugs - causing an aging out of the addict population.
2
But it will help a bit.
1
Someday in the future a literate soul will read this story and know how America was lost.
2
Ah yes, regulating a nontoxic common herb that has been used by humans (legally) for thousands of years will suddenly cause the downfall of this nation. How will we survive without the tens of millions of invalid arrests, lives destroyed, families ripped apart?
8
Right! - Before the Word of God was made manifest in 1937 by the prophet, Anslinger, America was a land filled with savages that lived in the mud, eating insects. Then, when Anslinger showed them marijuana was causing them to live like cavemen, they stopped consuming it and suddenly learned how to read and write and build things. They formed cities, governments, wrote symphonies, made movies, thought of medicine, trains, ships and airplanes. and built a mighty war machine that would dominate the world!
6
As a Colorado resident I can say one of the biggest advantages has been the jobs the industry provides. Where is the tax revenue data for this, and an accounting for increased economic activity of these employees?
Another benefit of legalizatiin is regulation of the safety of the product. Black market pot has heaven only knows what contaminants fungi etc in it. As testing data get more widely available the health conscious hopefully will move more to the legal product.
And i see a lot of the 60 crowd in the recreational shops. Dont think they have a medical card and theyre not there to get high.
Another benefit of legalizatiin is regulation of the safety of the product. Black market pot has heaven only knows what contaminants fungi etc in it. As testing data get more widely available the health conscious hopefully will move more to the legal product.
And i see a lot of the 60 crowd in the recreational shops. Dont think they have a medical card and theyre not there to get high.
10
$69 million is cause for concern? Big heads-up because when other states, especially neighboring states catch up with legalization, that tax revenue will drop significantly. Other commenters have pointed out the obvious savings generated by eliminating most of the law enforcement and incarceration burden but what about the benefits to our local economies here in Colorado from a booming new industry with high (ha, ha) rates of entry-level employment, career training, real estate generated income from retail stores and grow-ops and, of course, the marijuana tourism with hotels, restaurants, donut shops (ha, ha), indeed whole resort communities seeing considerable increases in regular sales taxes and overall income. If taxation represents $69 million at a 15 - 25% rate, the math is simple. My little town showed a 14% increase in sales taxes in the first year alone.
8
There is no doubt that taxes on the country's second-most popular recreational drug will be substantial. Will they save state budgets? No. Not by themselves. Who claimed they would? The savings in other areas will be tremendous - law enforcement, court costs, prisons, probation, etc. are just the tip of the ice burg.
More than 700,000 innocent Americans are arrested for simple marijuana possession each year and made second-class citizens - for life! They will forever face large obstacles to decent employment, education, travel, housing, government benefits, and will always go into court with one strike against them. They can even have their children taken away!
20 million Americans are now locked away in this very un-American sub-class. That has a horrible effect on the whole country, being an incredible waste of human potential.
The fraudulent prohibition has never accomplished one positive thing. It has only caused vast amounts of crime, corruption, violence, death and the severe diminishing of everyone's freedom.
There is no more important domestic issue than ending what is essentially the American Inquisition.
More than 700,000 innocent Americans are arrested for simple marijuana possession each year and made second-class citizens - for life! They will forever face large obstacles to decent employment, education, travel, housing, government benefits, and will always go into court with one strike against them. They can even have their children taken away!
20 million Americans are now locked away in this very un-American sub-class. That has a horrible effect on the whole country, being an incredible waste of human potential.
The fraudulent prohibition has never accomplished one positive thing. It has only caused vast amounts of crime, corruption, violence, death and the severe diminishing of everyone's freedom.
There is no more important domestic issue than ending what is essentially the American Inquisition.
23
He buries the straw man until the last part of the article when he mentions (quite casually I might add) that:
"Taxes on intoxicants are meant to offset the negative social effects of intoxicant use;"
The argument has never been that taxes alone would help solve the budget problems, but that the social effects themselves are also financially positive.
States that have legalized have seen reductions in suicide rates, traffic fatalities, opiate overdoses, domestic violence, and a number of other social ills, all of which have financial costs. Marijuana legalization has lowered state costs across a number of metrics not discussed in the article. Barro has cleverly ignored this assumption until the end of the article after nitpicking over a single set of predictions regarding the actual amount of the taxes. He (intentionally) misses the point all together. Taxes are the gravy of this strategy.
"Taxes on intoxicants are meant to offset the negative social effects of intoxicant use;"
The argument has never been that taxes alone would help solve the budget problems, but that the social effects themselves are also financially positive.
States that have legalized have seen reductions in suicide rates, traffic fatalities, opiate overdoses, domestic violence, and a number of other social ills, all of which have financial costs. Marijuana legalization has lowered state costs across a number of metrics not discussed in the article. Barro has cleverly ignored this assumption until the end of the article after nitpicking over a single set of predictions regarding the actual amount of the taxes. He (intentionally) misses the point all together. Taxes are the gravy of this strategy.
14
No doubt there are also some cost savings to not incarcerating people as well. Then there is the benefit of having marijuana users staying productive citizens, not losing their jobs over arrests. Most importantly though, is the intangible gain in freedom for the state's citizens who need not fear imprisonment and ruin from an arbitrary morals crime and the additional harassment that goes along with the unequal application of the law to minorities.
17
Looking at the financial benefits to government from marijuana legalization simply through the taxes generated and disregarding the savings from incarceration, law enforcement and other social costs is something someone who is completely stoned and obsessed with looking at their hands would do.
12
Impartial analysis, at best. Is there any data on what percentage of cannabis users have stayed with the black market? Because the prices are twice as high at the legal retailers here in Washington state compared to black market providers. If prices came down by half at the legal stores, I am sure the number of consumers would double. It was nearly as easy to buy marijuana before legalization as it is now. It's just more expensive to do it above board.
4
Think about it,your reading WSJ 69 mill is not enough to get your average wall street criminal out of bed in the morning.
8
I absolutely support the continued legalization of marijuana, alcohol, tobacco, gambling, and most other 'vices', but do so not because of their potential economic benefit, which is questionable, but because adults are going to do it whether it is legal or not, so I would prefer the money go to 'legitimate' businesses and our government and not into the hands of organized crime. As a 'vice,' however (i.e. a business that contributes little to the public welfare beyond jobs), states should not use taxes generated from 'vice' industries to support core services. Relying on the state lottery to pay for schools creates perverse incentives to support these industries, and serves as a regressive tax on the poor. Instead legislatures should be required to bank those funds, similar to how Norway has managed it's revenue from North Sea Oil.
Great article that illustrates how to manage such resources responsibly:
http://www.theguardian.com/commentisfree/2014/jan/13/north-sea-oil-money...
Great article that illustrates how to manage such resources responsibly:
http://www.theguardian.com/commentisfree/2014/jan/13/north-sea-oil-money...
5
It's a great mystery how the poor cannabis plant has survived the negative meanderings which thoughtful non-users spray after they have gathered more stretchy arguments against it. Reasons to legalize cannabis outweigh, in logical credits, reasons to ban it. And have no illusions that medical cannabis is a lie: She stayed terribly, actively, ill after the breast cancer surgery and the drug he gave her did nothing. After 23 hours, I blew 2 puffs of cannabis smoke into her mouth like a bird, and after 10 minutes she slept and later she ate. Miraculous. Tax those designer drugs which have one minute commercials in prime time featuring narration of the side effects over smiling colorful people.
11
If you want to wipe out a black market by legalization, you can't overtax the product.
11
Why should anyone worry over cannabis being returned to the pre-inflationary prices it once enjoyed? ("$10/oz") This, returning the commodity to a sane level as more consumers grow their own should be considered nothing but a positive development. It was the cost of lawyer's fees added to the "risk factors" of international smugglers in the 70's and 80's that drove the prices up to their current ridiculous levels of $20/g. Notice how nobody in Government ever raises the issue of returning it to pre-inflationary levels. They are all hoping to profit from it just as much as any "drug lord". Some are actually 'banking on it." But this was the point of legalization to begin with + It is just a plant, OK, it isn't gold, diamonds, and it's much less special than either the black market or government regulators want to admit. That being said, it has many, many uses which need credible legitimization, since humans have used it for centuries and will continue to for centuries more, regardless what the puritans may desire.
7
I remember $65/kilo. Not adjusted for inflation, of course. And the stuff wasn't very good. Still . . .
How many families won't be on the dole because 'Daddy got busted'? How many people will now have jobs in the research and nutraceutical industries that the 'drug war' made illegal and unthinkable?
It's not about money in the end, it's about what's right, and you can't put a price on that, especially after so many years of putting a high price on what was wrong.
It's not about money in the end, it's about what's right, and you can't put a price on that, especially after so many years of putting a high price on what was wrong.
27
I don't think we can expect normal accuracy and consistency from the proponents of marijuana legalization.
I don't think we can expect anything but half baked propaganda and absurd fariytales from the prohibitionist side.
22
You illustrate my point perfectly.
Science says otherwise.
o.k. so they are collecting 69 million, which is no small potatoes.....plus the bonus of how many police officers are not wasting their time busting petty non-violent criminals, for smoking or possessing small amounts of pot or how much are they saving by not having to prosecute convict and care for all those petty non-violent dope smokers....given ALL the facts of the money saved and the revenue obtained, I would think the number of 69$ million increases substantially.....
36
Add that to the millions and millions saved on invalid arrests, court costs, and police resources. Add that to the tens of thousands of new jobs. Add that to the 500 new business that are running. You can't even find an empty warehouse in Colorado. Every single legal sale is another sale the black market didn't make. The actual tax revenue is the smallest part of the equation. At the end of the day, ending the cancerous policy that is prohibition is the prize. The tax money is the cherry on top.
52
I agree with other readers that this is a very incomplete analysis. The benefits of legalization are supposed to be seen not only in tax revenues, but also in decreased costs of incarceration, in increased employment opportunities for those who would otherwise have a criminal record (being caught with marijuana), and in the increase in jobs related to welcoming an entire industry into the legal workforce. The article does mention that the state actually took in higher overall revenue (not just marijuana tax) than projected - clearly something is working, what is it? Things seem to be going well, just not as incredibly well (initially) as had been projected. But there is still room to fix some of the problems with the system.
16
They want to legislate an unhealthy vice in order to raise revenue......shame on the captialists!!
1
Unhealthy? It is safer than alcohol, Tobacco, and even fast food. It is life saving medicine for many, life changing medicine for many more. It it completely nontoxic, it comes with a 9% rate of "mental addiction", less than even coffee. And unlike cigarettes it has never been linked to head, neck, or lung cancer. I'm not saying it isn't "unhealthy", I'm saying there are hundreds of everyday products that are much more harmful to the user. And lets not forget, prohibition is an outright cancer that is ripping this nation apart. Talk about unhealthy...
23
It's really not that unhealthy. Much less unhealthy than fast food, high fructose corn syrup, alcohol, cigarettes, not exercising, etc.
13
Raising revenue for what again? Schools?...Hardly shameful. Pivot priorities for the greater gain. Legalize it, regulate it, and stop encouraging violence/jail time over a plant please.
6
What about savings from reduced spending on prosecution and incarceration for marijuana-related crimes?
21
I'm surprised that trial lawyers have not come out against legalization.
3
"Just" 69 million? Isn't that 69 million more than what they'd get prior to the legalization?
20
Ad campaigns extolling the benefits and fun of cannabis are needed.
Suggested slogan - Have another toke, we're going broke.
Suggested slogan - Have another toke, we're going broke.
8
How about - Happy days are nigh, We should all get high.
5
CO didn't bring in as much taxes because their tax rate on marijuana is so high it cannot compete with black market prices. Anyway, it is not an issue of taxation anyway. Marijuana should be completely legal with no abnormal taxes nor permits. It is your God given right to own and use marijuana.
21
I am very cynical towards so-called "sin taxes" or "pleasure taxes". First these are on alcohol and tobacco, next comes legalized use of a substance, such as cannabis, that is generally known to affect long-term human behavior. Will the financially broke, through incompetence and waste, states and municipalities invent taxes on the air everybody breaths or on the use of cocaine and other naturally or artificially produced narcotics?
No one is forcing you to smoke
10
Generally known to affect long-term human behavior? - Oh. You mean Reefer Madness. I hate to break it to you, but that was just an old, bogus propaganda flick.
The DEA's own administrative law judge, Francis Young, concluded after an exhaustive review of the evidence:
"Marijuana, in its natural form, is one of the safest therapeutically active substances known to man."
Science has shown there are no long-term effects of marijuana consumption and no significant harms. - Every person who switches from addictive, very harmful alcohol, to near harmless marijuana, improves their health tremendously - as well as the lives of their family and community.
The DEA's own administrative law judge, Francis Young, concluded after an exhaustive review of the evidence:
"Marijuana, in its natural form, is one of the safest therapeutically active substances known to man."
Science has shown there are no long-term effects of marijuana consumption and no significant harms. - Every person who switches from addictive, very harmful alcohol, to near harmless marijuana, improves their health tremendously - as well as the lives of their family and community.
The war on cannabis consumers has been raging for more than 80 years. How much more blood needs to be spilled?
Educated people know that cannabis prohibition has never been about public safety. Prohibition has always been about money and lots of it.
The police union lobbies congress to keep cannabis illegal while individual law enforcement members claim they are simply enforcing the law.
Please demand full legalization and nothing less! Let's end this insidious war as soon as possible!
Educated people know that cannabis prohibition has never been about public safety. Prohibition has always been about money and lots of it.
The police union lobbies congress to keep cannabis illegal while individual law enforcement members claim they are simply enforcing the law.
Please demand full legalization and nothing less! Let's end this insidious war as soon as possible!
31
This is a strange column because it seems to be going out of its way to pooh-pooh the economic benefits of drug policy reform. I find it unpersuasive. The economic benefits are likely to be huge even if the direct tax revenues are not.
First of all, $69 million is $69 million. A lot of states wouldn'd mind that. The fluky Colorado law that may force them to give the money back doesn't change the fact that pot generated real revenue in the first year.
Secondly, from what I have heard, nobody who lives in Colorado actually buys legal pot because the regulated price is so high. Residents still buy black market pot because it is so much cheaper. This will work itself out as the legal supply chain becomes more efficient.
In short, $100 million a year in tax revenue from marijuana is probably realistic. That's not a huge sum, but if you combine it with all the money the state is NOT spending throwing in jail for pot, and all the Colorado citizens who would otherwise be removed from the taxpaying workforce when they got a marijuana arrest on their record.
And then add in all the indirect economic benefits of the pot industry -- jobs in growing pot, researching new strains, developing new products (not just gummies but medicines). Plus pot tourism. Colorado benefits in many ways by being the early mover on marijuana reform.
First of all, $69 million is $69 million. A lot of states wouldn'd mind that. The fluky Colorado law that may force them to give the money back doesn't change the fact that pot generated real revenue in the first year.
Secondly, from what I have heard, nobody who lives in Colorado actually buys legal pot because the regulated price is so high. Residents still buy black market pot because it is so much cheaper. This will work itself out as the legal supply chain becomes more efficient.
In short, $100 million a year in tax revenue from marijuana is probably realistic. That's not a huge sum, but if you combine it with all the money the state is NOT spending throwing in jail for pot, and all the Colorado citizens who would otherwise be removed from the taxpaying workforce when they got a marijuana arrest on their record.
And then add in all the indirect economic benefits of the pot industry -- jobs in growing pot, researching new strains, developing new products (not just gummies but medicines). Plus pot tourism. Colorado benefits in many ways by being the early mover on marijuana reform.
35
It's not just taxes that will reduce state fiscal deficits, it's law enforcement, criminal justice, and social services costs that will be reduced. Let's see those figures please.
46
Add the reinstatement of some of our unjustly taken freedoms. How much are they worth? Maybe priceless...in America.
13