A recent study by the Rand Corporation estimates that Vermont could earn between $35 and $50 million per year if pot were legalized and taxed by the state.
The estimates were generated by looking at tax marijuana tax proceeds in the first two legal states; Colorado and Washington. The range in estimates came mostly from the multitude of decisions that could be made for the state’s legislation. In the state of Washington, for instance, the black market has put an incredible dent in the legal market and stifled the amount of tax dollars coming in. The $50 million number assumes that proper infrastructure would be put in place to eliminate the black market in Vermont.
Rand Corp’s study also assumed that Vermont currently consumes between 15 and 25 metric tons per year. This estimate is admittedly a shot in the dark at this point, as it’s extremely difficult to generate estimates based on black market sales. Based on consumption estimates, the total amount projected to be spent in a legal marijuana market could reach as high as $225 million per year.
All of this talk about money may have already put big green dollar signs in some eyes, but the report warns that, “Revenue is not the only goal, and maybe not even the primary goal, of a tax scheme. In the case of marijuana, an upsurge of problem use and underage use in the wake of legalization could create social, educational, and health damage that would outweigh all the revenue collected from even the most ambitious tax plan. The dangers of such an upsurge ought to dominate decisions about the level and form of taxation.”
There are inherent obstacles to any new legislation, and the first two legalized states can certainly attest to this matter. Scares over underage or accidental consumption have headlined newspapers more than once during the first year of legalization. However, Colorado saw a decrease in crime within the first 6 months of legalization and no one seems to be complaining about the extra tax revenue yet.
The cost of marijuana criminalization alone is enough to get most marijuana proponents heated. Although Vermont has decriminalized small amounts of marijuana in the state, they still spent just over $1 million a year enforcing marijuana laws, while collecting about $200,000 in fines for possession. With full legalization, Rand Corp’s report estimates that the state would still spend between $546,000 and $749,000 per year on enforcement, but that would be offset by a substantial increase in tax revenue.
Gov. Peter Shumlin is a proponent for marijuana decriminalization. Last Friday Shumlin said, “The question is how do we move to a smarter approach that doesn’t promote addiction, that doesn’t promote abuse and really accepts the reality, which is, it’s not like we’re saying yes marijuana or no marijuana. What we’re really asking is, ‘Do we want to continue having an illegal market for marijuana that you can get, or do we want to do this in a smarter way.’ ”
As more Americans weigh the answer to this question, it comes as no surprise that the growing majority are looking to a better answer than the failed and expensive war on drugs.
Photo Credit: Dougtone