California’s State Board of Equalization has estimated that $1.4 billion could be netted annually by legalization of recreational marijuana. For a state that has struggled with its budget for years, this seems like the pot of gold at the end of the rainbow. While some politicians have pushed for taking advantage of this possible revenue stream, a recent vote to change California marijuana standards failed to pass.
California already allows medical marijuana by doctor prescription and hauls in over $100 million each year in revenues, but that number is dwarfed by the amount that could be earned through legalizing recreational use. Not only would tax revenues skyrocket, but savings would also be recognized through reduced law enforcement efforts.
While some expenses would be incurred in order to set up a system of regulation around legalized recreational marijuana, similar to what already exists for medical marijuana, most experts project that California could still net well over $1 billion dollars annually. California NORML, an organization dedicated to reforming marijuana laws, estimates that California could earn revenue of $1 billion per year with a simple $1 per joint tax. That’s not taking into account the revenues earned through sales of other products, dispensary fees, or any other tax related to marijuana sales.
The sample study in Colorado is making a strong case for legalization of recreational marijuana. With tax revenues pouring in that exceed even the most optimistic of projections, the state is considering what to do with all the extra millions of dollars. In the meantime, few legal problems have been experienced though some high profile cases have been exploited by the media. Most people in the state, and across the nation, view Colorado’s experiment with legalized recreational marijuana an astounding success
With state coffers gladly accepting the extra cash, one may wonder how well those involved in the marijuana industry are faring. The marijuana industry is heavily regulated, taxed, and charged with fees at every level. That being said, business are still making a healthy profit. On January 1, when 37 legal marijuana shops opened in Colorado, they booked $1 million in sales for the first day of legal recreational marijuana sales.
If California were to follow Colorado’s lead, one would expect retailers to pay fees and taxes adding up to approximately 30% of revenue. With little competition for those who wish to purchase their marijuana legally, they would be able to capitalize on the type of pot tourism that is currently benefiting Colorado retailers.