National Marijuana Tax Revenue — $25 Billion?

Update at Huffington Post.  And there’s a caveat about my numbers being gross (not net of a 280E repeal).

America would probaly not see $25 billion in marijuana taxes, but that’s a straight line extrapolation from the most official estimate around.  According to an official state Fiscal Note,[1] Washington State’s enacted I-502 will raise some $564 million in taxes in fiscal 2015.  Extrapolating that per capita estimate, the revenue figure for the nation would be over $25.7 billion.[2]   That number is too high, probably, but not by an order of magnitude.Any revenue might be split among the Federal Government and the States, if all jurisdictions tax.

I don’t believe the Fiscal Note, for reasons explained in some detail in “Gangs, Ganjapreneurs, or Government: Marijuana Revenue up for Grabs,” State Tax Notes, Volume 66, Number 4, pages 255-269 (October 22, 2012), online at http://ssrn.com/abstract=2165864 and https://newtax.files.wordpress.com/2012/10/gangs-ganjapreneurs-or-government-marijuana-revenue-up-for-grabs.pdf.  I think the estimate for Washington is too high.  But I think Washington’s tax rate is too low, and leaves money on the table.

Everything depends on the nature of taxes and suppression of evaders.  I think it would be a stretch to bring in $25 billion for the nation, but that number is not an order of magnitude wrong.


[1] Multiple Agency Fiscal Note Summary, Bill 502 XIL, Mar. 20, 2012, available at http://www.thestranger.com/images/blogimages/2012/03/20/1332288897-partial_fiscal_note_-_032012.pdf [hereinafter “Fiscal Note”].  That estimate exceeds the expectations of supporters of the initiative, who predicted total revenues of some $215 million a year.  New Approach Washington, “Factsheet: A Public Health Approach to Marijuana Use,” http://www.newapproachwa.org/sites/newapproachwa.org/files/I-502%20Factsheet%20-%20Public%20Health%20Approach.pdf (Feb. 17, 2012).

[2] The federal 2011 population estimate for Washington is 6,830,038. http://quickfacts.census.gov/qfd/states/53000.html (last visited May 13, 2012).  The per capita revenue figure is thus $82.59.  The estimated population of the United States is 311,591,917.  Id.

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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