Marijuana Revenue in Rhode Island

From  Pat Oglesby, the Founder of the Center for New Revenue who recently weighed in on the Colorado taxation scenario for the Huffington Post, addressed legalization — and revenue — with GoLocal.

“After legalization, pre-tax prices of legal marijuana are likely to be lower than current black market prices,” said Oglesby. “Whether after-tax prices are lower than current black market prices depends on how much tax Rhode Island would collect,” if legalized.

As for how much Rhode Island could collect, Oglesby said, “There’s a lot of uncertainty. The amount of revenue Rhode Island could collect would be limited, because illegal black market operators would be ready to compete against legal sales. So Rhode Island would lose out if the legal price is too high. The legal price can be higher than the black market price and still get customers, because the legal product will be branded, tested – and legal. But there’s a limit.”

Oglesby continued, “As for revenue, the official Washington State estimate was $500 million per year — $80 per resident (not per user) per year. I think that’s way, way too high. Colorado is figuring on less than $20 per resident per year. That sounds more realistic. With a million people in Rhode Island, $20 million might be a good wild guess about what revenue to look for.”

“Beyond costs of setting up and administering the new law, there is one danger to revenue,” said Oglesby. “IF people drink less alcohol because drinkers sometimes switch to marijuana instead, taxes on beer, wine, and liquor would go down, ” he said, adding, “That’s a big IF.”

Source: (original spelling corrected).

Revenue estimating is beyond my competence, and basing an estimate for RI on an estimate (not facts) in CO exaggerates the problem.  But no one knows, so I’m willing to guess.


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