Could Taxing Marijuana Bring in Billions, Or Are Estimates Wildly High?


Now that voters in Colorado and Washington have legalized recreational marijuana use, some cash-starved legislators are seeing dollar signs in dime bags, with talk that a tax on marijuana could pump hundreds of millions or even billions into budgets still reeling from the recession, reports Politico. “I've seen some estimates in the high tens of millions, as much as $100 million for [Colorado],” said Rep. Jared Polis (D-Co.), who's pushing a federal legalization in Congress. Money like that could make a big difference, such as a “substantial dent in needed school improvements, particularly in poorer districts.” Dale Gieringer of California National Organization for the Reform of Marijuana Laws estimates that legalizing pot would bring in at least $1.2 billion to his state alone. His study assumes a sales tax plus an additional $50 levy per ounce of marijuana, which runs between $280 and $420. Skeptics say otherwise. “This is not a cash cow that can solve anyone's fiscal problems,” said Harvard economics Prof. Jeffrey Miron, a pro-legalization scholar who says Gieringer's numbers are three times what they should be. He estimates that a nationwide legalization that taxed marijuana like alcohol and tobacco would mean $6.4 billion in new tax revenue – $4.3 billion for Uncle Sam and $2.1 billion for the states. Still, no one knows how much marijuana is bought and sold, let alone how legalization will affect consumption and prices.

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