MuniLand

Muniland’s marijuana math

Source: ABC 7 News Denver

The sale of marijuana for recreational use was made legal in Colorado starting January 1, and it appears to be a big success. Product and tax revenue numbers are not yet available, but some have predicted that Colorado will bring in an estimated $40 million in tax revenue this year from marijuana sales. USA Today reported anticipated tax revenues of $1.9 billion in five years for Washington State, which legalized recreational use in November:

For consumers, the effective tax rate is 44 percent, according to the Washington Liquor Control Board. The sticker price includes a 25 percent tax on producers and a 25 percent tax on processors plus 25 percent added to the price of the product. Buyers also pay an additional 6.5 percent state sales tax.

The revenue could bring in as much as $1.9 billion in the first five years to go toward a variety of services, including social and health programs, a marijuana use hotline and the Alcohol and Drug Abuse Institute at the University of Washington. The state’s Liquor Control Board will begin issuing permits for marijuana retail locations starting Nov. 18. Under the law, the state can have a maximum of 334 retail locations.

These projected revenues do not reflect new employment that will be created by the growing and selling of pot. Legal pot jobs will be transparent to the government and will generate income and sales taxes. Legalization of marijuana will push jobs out of the underground cash economy and into the mainstream.

Then there are the savings that will come from reduced expenses for law enforcement, courtroom and jail time. CNBC wrote in 2010:

Taxing the buzz

Colorado voters approved recreational marijuana sales last November. The infrastructure is now being prepared to begin sales on January 1, 2014. Part of the plan approved by voters is a state tax of 25 percent. Reuters reports:

Under the marijuana tax proposal, a combined 15 percent excise and 10 percent sales tax would be imposed on recreational pot sales, with the first $40 million raised to fund school construction projects.

In Denver, a local ballot measure that would tack an additional 3.5 percent city sales tax on pot shops also appeared headed for passage, by a margin of 69 to 31 percent with roughly a third of votes counted.

Decriminalize the marijuana business

 

Slowly, the personal use of marijuana is becoming legal across America. The Council on State Governments reported:

Marijuana remains illegal under federal law, but last year, residents in both Colorado and Washington voted to make recreational use of the drug legal, essentially ignoring the 1970 law. Although these states have legalized a federally identified illegal drug, they are not the first to do so.

Starting with California in 1996, 21 states have made the use of medical marijuana for ailing patients legal. Of those 21, 16 states have decriminalized those found to be holding small amounts marijuana, six of which were added in 2013.

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