Revenue from marijuana gets a look

A humorous look at revenue from taxing marijuana is “Dude, Should Marijuana Be Legalized and Taxed?,” by Howard Gleckman, http://taxvox.taxpolicycenter.org/2012/12/06/dude-should-marijuana-be-legalized-and-taxed/

But the $9 billion it reports sounds a little low.  A strong revenue regime – after-tax prices unchanged, with government taking the 80 percent Europeans get from cigarettes, might see 30 million consumers spending $1,000 each a year.  That’s $24 billion in tax.  That’s coincidentally in line with $25+ billion from the official WA estimate extrapolated.[1]  That WA estimate is too high, I think, but WA’s tax plan is weak:  The initiative process puts the marijuana community in charge of writing the tax laws.  They can hardly be expected to lead the charge to tax themselves.

Even $500 per consumer per year could send $400 to government — $12 billion total.

That last number seems conservative, but who knows?  Maybe the market in dollar terms will be small.  John Prine said that his “illegal smile . . . don’t cost very much, and it lasts a long while.”

Maybe some day we’ll find out.


[1] See page 259, text accompanying footnote 34, of “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.

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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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