The legalization of marijuana has attracted a lot of interest from different corners of the globe and this includes money flowing in and out of cannabis trade. The aspect of revenue is one of the main factors put into consideration by states before they can even consider legalizing marijuana use. The District of Columbia alongside four states in America has legalized marijuana retail sales through a majority vote. On the same trend, there are 25 other states that have allowed the trade of medical marijuana. Since 2011, the marijuana industry has continued to grow in the United States and in the next few years, a lot will have been achieved.
Important Findings about Revenue from Marijuana
In states that have seen the rise of marijuana use such as Washington and Colorado, initial estimates have been exceeded. Tax collections from the cannabis industry are seemingly booming and other states can learn from this. Apparently, it is becoming a multi-billion dollar business by the turn of each and every year. Oregon, Colorado and Washington have made significant steps towards the reduction of marijuana tax rates. As a result, states such as Alaska are now considering legalizing Marijuana following the failure to significantly reduce the black market with the initial set rates of 30% tax. New developments have come up with proposed rates ranging between 10 and 25%.
In recent times, tax rates imposed on the final retail sales have been voted as the most valuable taxation. Other taxation forms such as those imposed on marijuana flowers at a specific amount, tax at the producer level instead of the retail level have faced some challenges during the implementation. Again, medical marijuana doesn’t have strict regulations and as a result, the tax imposed on it is always less than for recreational weed. Therefore, targeting recreational sales in the retail market has been most challenging due to the regulatory structure that requires the imposing of heavy taxes.
With much-anticipated hope of increased revenue from marijuana reaching to millions of dollars, establishing this takes a lead time. For example in Washington and Colorado, consumers took time to familiarize themselves with the emerging system. The local authorities and the state spent a considerable amount of time and money to set up necessary structures and a regulatory framework.
For maximum benefits from the revenues accruing from marijuana, attention must shift to issues of health, local enforcement, agriculture and zoning. These concerns have not yet been fully handled in ballot initiatives and now await resolution during the process of implementation.
Possible Benefits with Tax on Marijuana Sales
With the passing of medical marijuana laws in the District of Columbia and in other twenty states, there was hope of increasing revenue collection. This has become a reality in some states while others have not yet started doing so. In the latter, programs have not yet been rolled out and hence don’t have estimates of how much revenue can be collected. However, the tax windfall documented by some of the states has immensely convinced other states in the region to consider taking on this noble task. For instance, voters in Florida have a chance this November to amend their constitution in order to legalize the use of medical marijuana for individuals with “debilitating diseases.” If the move turns out successful, it will lead to the opening up of a strong market for medical marijuana amongst the close to 20 million people living in Florida.
In California, which is rated as the most populous state, accrues between $59 million and $109 million of tax collections from the sale of medical cannabis on an annual basis. The earnings from medical weed can give an idea how a state like California may benefit from a complete decriminalization of marijuana. If this is what medical cannabis has been able to earn for the state, the earnings that could result from both the medical pot and recreational marijuana are unimaginable. At the moment, California has very liberal laws on the use of medical marijuana in the United States. What lies in wait is the full legalization for the use of pot among adults, which will lead to an increased revenue collection. A monetary assessment of weed legalization the attorney general’s office in California established that there would be a lot of savings of hundreds of millions of dollars in enforcement efforts. Additionally, the state would gain a lot more in terms of hundreds of millions from the collection of tax revenue.
California is not the only state that has benefited from proceeds coming from the sale of marijuana. For Colorado, the story has been the same. In the first month after the launch of the legal marijuana program, Colorado collected $2.9 million of tax for both medical marijuana and pot for recreational purposes. This was way more than what Colorado would have earned for the medical pot program alone for one month in 2015. Therefore, the cannabis industry is very lucrative for the authorities in terms of revenue collection.