Marijuana Revenue: $35 billion

Could the nation collect $35 billion in marijuana revenue?  Drug policy expert and my friend Mark Kleiman says:

“Producing [a year’s supply of]  cannabis and distributing on the legal market might cost you $5 billion — but only if you did it clumsily.

. . .

“I don’t know what it would cost to run those dozen farms [needed to produce a year’s supply] but not a lot of money. Then you’d have to cure it and process it and test it and package it and label and distribute it and market it. Still, a couple billion dollars. The rest of the $40 billion plus whatever the spending is by the new users is available as tax.”

Tax collections (or monopoly profits) of $35 billion ($40 billion less $5 billion) reflect just the current market —  no new use.  But collecting that large amount requires political will, national uniformity, wholesale conversion of the medical marijuana market to taxed recreational use (as Ethan Nadelmann predicts), and a determined effort to beat the black market.

UPDATE 23 July 2018:  The cannabis market seems likely to exceed $40 billion Kevin Murphy, the CEO of the company that John Boehner joined, predicted $100 billion before long.  But the government take won’t likely get to more than half of the total after-tax price.   Europe collects only 80 percent of the consumer price of cigarettes in taxes (80 for government, 20 for all sellers in the supply chain.  RAND-Vermont, https://www.rand.org/pubs/research_reports/RR864.html, page 80 — 400 percent of the pre-tax price, though it doesn’t operate that way).  Cannabis will not bear such a high tax burden.  https://newtax.files.wordpress.com/2014/08/laws-to-tax-marijuana-published-version-in-state-tax-notes.pdf, page 258.

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