“Assuming a fully functioning marijuana market and the assumptions following in this summary, estimated total revenue generated to the state could be as high as $1,943,936,000 over five fiscal years.”-Washington OFM Fiscal Impact Statement (I-502)
On 06 November 2012, voters in the U.S. states of Washington and Colorado legalized the recreational use of marijuana for adults.
Many people will claim this as a victory for civil liberties, but it could result in a huge boost to the economies of those states, as well.
According to Culture Magazine, in 2011 the state of Colorado collected $5 million USD in taxes from medical marijuana use, about $1.5 million more than the state’s electronics and appliance retail industry!
Now Colorado will be able to collect taxes on the recreational use of marijuana as well. According to supporters of the new law, it will also save law enforcement $12 million in the first year, and create $24 million every year for school construction projects. They estimate that after five years legalized marijuana will result in $100 million per year in revenues and savings for state/local governments!
According to Washington’s own State Office of Financial Management, legalized marijuana will create almost $2 billion in tax revenue for the state, over the next five years!
State officials also expect increased revenue from fees for traffic violations, as a result of driving while under the influence of marijuana.
And by the way, this revenue comes even as the price of marijuana is expected to drop due to the fact that it’s now legal. In Washington the marijuana tax system is a European style Value Added Tax, meaning it is taxed at production, distribution and at the final sale. Essentially it’s taxed three times.
The problem now are the threats coming from Washington DC: “One of the nightmare scenarios for Washington is Congress gets really nasty and says, ‘Ha! No more federal highway dollars for you.’ If they do something like that then the financial loss vastly swamps any of the financial gains.”-Jonathan Caulkins, Carnegie Melon University