One of the biggest arguments to legalize marijuana is that it will generate a lot of money. On one hand I like that argument because it seems to have gained a lot of traction in recent years, and the legalization movement has no doubt benefited as a result. However, on the other hand I don’t like that argument because I have always felt that a lot of people will only measure legalization’s success based off of how much money it generates.
Legalization is sound public policy either way, and even if ending marijuana prohibition resulted in zero dollars in tax revenue, the savings from not enforcing such a failed policy would be more than worth it. With that being said, many people out there have dollar signs in their visions, so it’s going to be very hard to convince people that legalization has worked unless it generates dollars, and lots of dollars at that. Bloomberg recently published an article in which it talks about Washington State’s Office of Financial Management and the projection that the office put out. Per Bloomberg:
Washington state expects marijuana sales taxes to bring in more than $1 billion over the next four years, according to a budget forecast published by the Office of Financial Management.
In the first year since legalizing both medical and recreational cannabis, Washington collected $67.5 million in marijuana-related taxes, directed toward its general fund and health-related services.
There is one very large factor that was omitted from the Bloomberg article – Oregon now allows limited recreational marijuana sales. Oregon’s marijuana is just as good as Washington’s (better if you ask some people), and it’s significantly cheaper. As the fall flood of outdoor marijuana pours into Oregon dispensaries, prices are about to plummet. Right now Oregon dispensaries can only sell flower (and clones and seeds), but next year they will be able to sell every marijuana product that is out there. A lot of Washington’s most successful marijuana stores are located along the Oregon/Washington border, and I guarantee many of them are already feeling the pinch.
That trend is only going to continue as more stores open in Oregon, more products are sold in those stores, and as a result, more and more people make their purchases in Oregon versus Washington. Washington will still bring in a good amount of money no doubt, but I think the state needs to temper its expectations. Marijuana will be taxed in Washington at a 37% rate, while Oregon will tax marijuana at a proposed 20% rate. Until that changes, people are going to choose Oregon over Washington more often than not when there is a choice between the two.