For decades, marijuana activists have been championing legalization as a win for personal freedom, public health, and safety. As it turns out, there’s another group that could reap rewards from sensible drug policy: governments.
The Tax Foundation released two reports this month showing the potential for great tax revenue from legal marijuana. In the past four years alone, the states of Colorado and Washington have collected higher revenues than initially projected from taxing recreational pot:
Colorado anticipated $70 million in marijuana tax collections per year, and after a slow initial start, state collections will likely exceed $140 million in calendar year 2016. In Washington, after a slow start to bring the licensing system online, sales are now averaging over $2 million a day with revenue possibly reaching $270 million per year. If all states legalized and taxed marijuana, states could collectively expect to raise between $5 billion and $18 billion per year. While these amounts are not stratospheric, they are considerable and exceed additional enforcement and regulatory costs incurred by the states.
Of course, these figures represent just two states. If recreational marijuana was legalized across the country, the check would be even bigger:
A mature marijuana industry could generate up to $28 billion in tax revenues for federal, state, and local governments, including $7 billion in federal revenue: $5.5 billion from business taxes and $1.5 billion from income and payroll taxes.
In short, legalizing marijuana is a win-win: for personal freedom and for government revenue. So what are states waiting for?