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Report: Marijuana use would generate $82 million in taxes

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Arizonans would buy nearly $500 million worth of marijuana a year by 2020 if voters agree in November to allow its use here for recreational purposes, according to a new report.

The study by the staff of the Joint Legislative Budget Committee figures legalization would generate nearly $82 million in taxes when the program is fully implemented. That includes $74 million based on a tax rate of 15 percent of retail costs, with the balance coming from things like licensing dealers and growers.

That puts the price paid by consumers at the cash register north of $490 million.

Of what’s collected, legislative budget staffers say $27.8 million would go to general aid to education, with an identical amount available to help schools pay for full-day kindergarten programs.

The analysis was prepared as backers of the initiative prepare to turn in petitions today with more than 250,000 signatures to put the issue to voters. Even with a certain percentage likely being disqualified, that should provide a sufficient margin to meet the legally required minimum of 150,642.

Backers of the initiative, funded largely with dollars from the national Marijuana Policy Project, have been touting the financial benefits of legalization. This, however, is the first state-sponsored analysis putting actual numbers behind the claims.

But Maricopa County Attorney Bill Montgomery, one of the leaders of the opposition, said none of this should sway voters into approving something he considers bad public policy. Montgomery said it does not take into account additional costs from allowing anyone age 21 and older use the drug, from additional addiction treatment and increased accidents to lower work productivity.

And even if that were not the case, Montgomery said there’s less there than meets the eye.

He called the $27.8 million a year in state aid to schools a “pittance,” especially compared with the fact that voters just approved Proposition 123 which will generate more than $300 million a year. Put another way, Montgomery said, the money comes out to less than $26 a year per student in public schools.

By comparison, that $82 million estimate of total revenues from legal marijuana sales by 2020 compares to more than $71 million a year generated in taxes on alcoholic beverages in 2015, the most recent numbers available.

The numbers in the JLBC report differ somewhat from estimates prepared earlier this year by the Tax Foundation. That group said legalization of marijuana and the 15 percent tax that would go with it could generate $113 million.

But JLBC analyst Patrick Moran, who prepared the report, said that is based on an assumption that Arizona would have the same level of sales as Colorado. That, he said, is flawed.

“Even prior to legalization of marijuana in Colorado, Colorado had consistently significantly higher rates of marijuana use than Arizona,” he wrote. Moran said recent figures from the National Survey of Drug Use and Health show Arizona had about 587,100 adult marijuana users in 2013, versus 705,900 in Colorado at the same time.

And Moran said there’s something else at work: The Arizona measure would initially cap the number of places where the drug can be sold at fewer than 150, versus nearly 1,500 liquor stores in the state; Colorado has no such cap.

But the JLBC estimate is close to one prepared last year by the Grand Canyon Institute.

The revenues generated by that 15 percent levy on marijuana do not include what state and local governments can collect on top of that in sales taxes.

Moran figures the state tax would generate another $24.8 million 2020, with cities and counties getting about $6.5 million of that in revenue sharing. On top of that, the sales taxes imposed by local governments would generate another $14 million.

2 comments

  1. Nice to know that Maricopa County Attorney Mr. Whitebread Montgomery is such an expert on the subject. Obviously getting his facts from the liquor and tobacco lobbies, which have done such yeoman work in protecting our youth and older folks from substance abuse and addiction. How does Montgomery, who’s consistently staked out equally outrageous, reactionary positions against libertarian initiatives with which most Arizonans agree, balance the scales of Justice? And how does he look in the mirror each day, as his hypocrisy mounts new heights?

    PS Could the AZ Capitol Times find a more disagreeable photo to accompany this story? Is this a political statement, or is it simply a display of bad taste in every sense of the term?

  2. According to the NIH Alcohol Abuse and Alcoholism; about 88,000 people die in the US every year from alcohol related causes … and this is driven by our insatiable demand for alcohol. $211B in sales in 2014.

    According to the American Society of Addictive Medicine there are 47,000 drug overdoses per year led by 19,000 prescription pain medication deaths per year. If you are worried about those heroin overdose deaths … 10,500 per year … 4 in 5 new heroin users start with prescription pain medication.

    It would seem there are some folks rightfully concerned about marijuana (pot/dope) … especially since we have blocked all research for decades. But I think there are bigger concerns than elected officials blocking our scientists from finding the truth of the effects of marijuana;

    1) Our front line law enforcement personnel are putting their lives on the line to stop transportation and sale of a substance that we have no knowledge of the effects while 6.5 million Americans of all ages the last decade have been arrested for violating marijuana laws … 619,000 arrests in 2014 just for just possessing pot!

    2) Why Why Why do our elected officials and citizenry continue to promote our out of control alcoholic beverage and pharmaceutical industries … while the energy and tough on crime public posturing on the “evils” of pot diverts our focus from the human catastrophe being caused by alcohol and prescription opioids!

    If we thought the tobacco industry had influence over what we think through media “education” just think of how the alcohol and pharma industries control our thinking.

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