PART of the case for Initiative 502 is about public money — the money wasted by trying to stamp out marijuana and the money given up by failing to legalize it and tax it.
Under Initiative 502 the state would impose a 25 percent marijuana tax at wholesale and another 25 percent at retail. Add in the other taxes on business, and the state would attempt to capture more than half the final value.
How much would that be? In its fiscal note on I-502, the state Office of Financial Management estimated possible marijuana-tax revenue in the year ending June 30, 2015, at $434 million. That’s comparable with the state’s take from the cigarette tax ($425 million in fiscal 2012) and the state and local take from liquor ($426 million in 2011).
There are also sales and business taxes. OFM estimated the total state and local government revenue from marijuana at $566 million. That’s roughly what the state budgets in taxpayer money for its six universities. Most of the marijuana money, however, would be earmarked for health-related spending (see chart).
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All these estimates rest on some big assumptions. OFM estimates the number of marijuana smokers from a federal survey. Its revenue estimate assumes medical dispensaries are serving none of the demand, that the illicit market will go away, and that there will be no marijuana tourists. It assumes smokers will pay $12 a gram. Above all, it assumes the federal government will not intervene.
Any of these assumptions may be wrong. No one really knows what state marijuana revenues would be. But it could be a lot.
Putting I-502 into effect would also save the money now spent on law enforcement. A study by Mark Cooke of the American Civil Liberties Union of Washington (one of 502’s sponsors), estimates that the extra cost of a simple marijuana arrest for police, courts, prosecutors, defense, jail and supervision at $2,881.
Statewide there were about 9,308 marijuana misdemeanor cases filed in 2010 and about 670 marijuana felony cases. ACLU estimates that from 2000 to 2010, the statewide marijuana enforcement costs totaled $211 million. That estimate does not include the costs in lost income and opportunities borne by those who were arrested or their families.
The bottom line: Legalizing marijuana offers government a pot of money, both in revenue and in savings.