One of the bigger economic theories of legalizing marijuana in the United States is tax revenue that would fill the coffers of state and local governments. While tax revenue has come in, the numbers are NOT matching up to their predictions.
Here’s more from Governing.com:
Meanwhile, states are hoping his good fortune benefits their coffers as well. Legalization advocates have promised big potential tax revenues from pot sales. In Illinois, which legalized marijuana in June, a study predicted yearly revenues as high as $676 million. Early legalizer Colorado has reaped a windfall of more than $1 billion in total collections since 2014.
Nevertheless, states shouldn’t assume a guaranteed jackpot for their budgets. California collected $82 million in its first six months of sales, falling far short of projected revenues of $185 million. In Massachusetts, revenue officials projecting $63 million in taxes by June 2018 had collected a paltry $5.9 million as of that March. Even in Colorado, revenues may have plateaued, according to a market analysis commissioned by the Colorado Department of Revenue.
In Colorado, for instance, the state’s market analysis reports that retail prices for cannabis fell 62 percent from 2014 to 2017. In Oregon, marijuana can now be had for as little as $60 an ounce, compared to $350 on the illegal market, according to Karen O’Keefe of the Marijuana Policy Project.
But even with maximized revenue, pot taxes will likely only account for about 1 percent of overall state budgets, according to the Institute on Taxation and Economic Policy. The $266 million Colorado collected in 2018, for instance, pales next to the state’s $15 billion in total revenues and $32 billion budget.