How Much Money Do Marijuana Taxes Really Bring?

A new study from Moody’s Investor Service says the fiscal benefits of legalizing marijuana outweigh the costs of regulating the product for state and local governments. But the study also pours cold water on the claim that legal cannabis always yields a windfall. Instead, researchers found modest gains in tax revenue where recreational marijuana has been legalized. Part of that is due to the large amount of revenue spent on marijuana-related enforcement.

Despite high taxes on the legal sales of the drug, the revenue accounts for a small portion of government budgets. In Colorado, the first state to legalize recreational use, a marijuana tax brings in the equivalent of about 2 percent of the state budget.

In Washington state, gross revenue from marijuana legalization equaled 1.2 percent of general fund revenue in the 2015-17 state budget.

Most of the states that have legalized marijuana earmark the revenue for law enforcement, drug treatment and other specific programs, which doesn't help the states' financial flexibility.

Likewise, Moody's described the revenue effect as minimal on local governments in states with legalized pot.

Read more about the study here.


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