Research Essay
Revenues High on Marijuana
An unexpected source of revenue—marijuana—is bolstering the balance sheets of an increasing number of states and cities across the nation. It remains an illegal drug in the eyes of the federal government, but its sale is permitted in 18 states and the District of Columbia.
Last November, voters in Colorado and Washington State approved the legalization of marijuana, the first two states in the country to sanction its recreational use.
Both states stand to reap a huge windfall in tax revenues from sales. In Washington, the drug will be taxed three times at 25 percent total; the grower, processor, and retailer all will pay. Estimates have marijuana delivering the state about $500 million in annual tax revenue.
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sale of medical marijuana. Last year, Vermont, Massachusetts, and Connecticut joined them; legislation is pending in New Hampshire.
In 2012, five of the eight dispensaries allowed under the law opened in Maine, producing $265,655 in sales taxes. The state also collected an additional $488,700 in regulatory fees, accord- ing to data provided by Maine taxation and health officials. The sales tax in Maine is five percent, and all marijuana sales are taxed because it is not a prescription drug.
Rhode Island, which has the nation's highest unemployment rate, is expected to collect about $1 milhon in tax revenues from its three planned (and allowed) dispensaries this year. "We welcome any revenue," says David M. Sullivan, Rhode Island's tax admin- istrator. "Every little bit counts." The dispensary sales are subject to a seven percent sales tax and a net patient revenue tax of four percent that is based on gross sales.
As the number of patients continues to grow, each state will see their sales tax revenues rise.
—W. Zachary Maiinowski
Maiinowski is an investigative reporter for the Providence Journal.
(Left) A medical nnarijuana dispensary in Denver. (Below) Eighteen states allow medical marijuana use, eight others have legislation pending (Illinois, Iowa, Kansas, Kentucky, Maryland, New Hampshire, New York, and Oklahoma), and two—Colorado and Washington—in 2012 began allowing recreational use. In Montana, a federal crackdown has resulted in a 71 percent drop in registered patients since 2011.
Colorado limits taxes to 15 percent of the wholesale price through 2017, but it still will bring in about $60 million. Both Colorado and Washington plan to use the revenue to build new schools and pump dollars into their general funds. That was a key selling point in getting voters to support the legalization initiative.
Meanwhile, medical marijuana has quietly been a growing source of revenue for many states and cities as well. In some states, such as California, the medical marijuana program has been around for nearly two decades, and officials there and elsewhere have found new ways to squeeze more money in taxes and regulatory fees from the programs.
In New England, Maine and Rhode Island have led the way as the first of the region's six states to allow the state-sponsored
Meghan Stromberg is Planning'^ news editor. Please send information about possible news stories to mstrombergigiplanning.org, or call her at 312-786-6385.
American Planning Association
State
Alaska (1998)
Arizona (2010)
California (1996)
Colorado (2000,2012)
Connecticut (2012)
Delaware (2012)
District of Columbia (2010)
Hawaii County, Hawaii (2000)
Maine (1999)
Massachusetts (2012)
Michigan (2008)
Montana (2004)
Nevada (2000)
New Jersey (2010)
New Mexico (2007)
Oregon (2008)
Rhode Island (2006)
Vermont (2004)
Washington (1998,2012)
Annual state revenue
$30,000
$10 miilion-plus (projected)
$100 million (projected)
$60 million (projected
No data
No data
$400,000 (in first four years)
$100,000
$754,355(2012)
No data
$9 million
$700,000
$500,000
No data
$700,000
$7 million
$700,000 (projected)
$100,000 (projected)
$500 million (projected)
Number of dispensaries; patients
0; 1,246
124 planned; 33,601 2,100; 553,684
800; 107,666
10 allowed; no data
0;21
1 planned; no data
0; 11,695
5; 16,444
35 allowed; no data
0; 122,349
0; 8,717
0; 3,558
1;239
11; 8,188
0; 54,589
3 planned; 4,926
3 planned; 661
0; 99,943
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