Marijuana Tax Revenue and Enforcement Savings adds up to a vast sum
Posted by Marijuana Doctors on 01/19/2015 in Medical Marijuana Research
One of the main reasons proponents of marijuana legalization uses to sway the prohibition argument in their favor is “Tax revenue” and “saving money”. The logic is simple, if you regulate and tax marijuana similar to alcohol; you create a new revenue stream for the state while at the same time reducing costs associated with enforcing marijuana laws.
Originally Colorado economists estimated that the state would bring in roughly $134 Million USD in tax revenue throughout 2014. Current estimates place the total tax income of the cannabis market at roughly $98 Million.
While the state did not meet its original estimates, it still managed to bring in close to 100 million USD in one year. Money that otherwise would have gone directly to the black market. You must also remember that this 100 million only represents 27.5% of the gross income generated by the industry this year.
With the legal regulated market still in its infant stages we should expect to see tweaks here and there. Hopefully, we don’t see the proposed 50% additional excise tax from the Federal government as that would drive more “legal buyers” back to the black market.
While legalizing cannabis does have a financial incentive, our priority should be on dismantling the negative effects of prohibition. This means that one of our primary goals should be to undermine the black market incentive, which the Colorado system is doing quite well. Sure, we still have some leaks here and there, but overall we can call it a success.
Now, while making money from legal sales is important we should also look at the amount of money saved by not enforcing marijuana laws.
An estimated $145 million dollars was saved this year in Colorado, according to a Harvard report. As a result, crime went down and the justice system became less congested over low-level marijuana convictions not being a priority of law enforcement.
Tally this up with the Tax Revenue generated by the legal market we’re talking about roughly a quarter of a billion dollars.
Money to be used for Society
What will Colorado do with their $250 million USD they saved/generated this year? There are plenty of options for the state and a large portion of that will be dedicated to developing education, rehabilitation and public health issues.
This is a quarter of a billion dollars that would have been wasted on law enforcement, and funneled to the black market. The legalization process has shown that from an economic standpoint, it is a definite success.
As time progresses the picture will only become clearer as to how exactly cannabis legalization benefits society. We’ll keep a watchful eye in 2015!