East Coast State Poised To Make A Fortune On Marijuana
MONTPELIER, Vt. (AP) — Vermont could collect hundreds of millions of dollars in tax revenue if it were to legalize cannabis, but only if other nearby states don’t also jump on the bandwagon, according to research released Friday.The study comes as states across the country increasingly discover the potential budget gain from taxing an underground business, even while the nascent legal marijuana business in Colorado and Washington experiences some growing pains.
In Vermont, the Rand Corporation found that money made from marijuana consumers could, in theory, generate between $20 million and $75 million a year for the state.The larger numbers could be reached through what the report calls “marijuana tourism and illicit exports.” It also found that nearly 40 times as many current marijuana consumers live within 200 miles of Vermont than live in the state.
The preface to the report, which does not make a recommendation about whether the state should legalize cannabis, says it is meant to “inform the debate.” While it was arranged for Vermont, the report says its conclusions could be useful to other states seeing marijuana legalization. Such high revenues, however, are by no means assured.
“If the federal government intervened to stop such cross-border traffic or if another state in the Northeast decided to legalize cannabis recreational or medicinal and set lower tax rates, these potential revenues might not materialize,” the report said.
“Indeed, because legal marijuana can distribute across borders in either direction, Vermont’s prospects of deriving considerable tax revenue even from its own residents would become much less encouraging if one of its immediate neighbors were to legalize with low taxes,” it said. “It is not clear that Vermont has any long-run comparative advantage in being introduced in the industry.”
Vermont currently allows the use of medical marijuana and the possession of small amounts of pot has been decriminalized. Gov. Peter Shumlin has said he believes the state will follow Washington and Colorado in legalizing it, but he wants to see how it plays out in other states before becoming lenient on Vermont laws.
The price of cannabis in Washington has dropped since the sky-high prices when post shops opened six months ago, and now growers complain the state is not properly regulating inventory.
Regulators in Colorado have capped production to deter weed from slipping into nearby states, but that has meant more demand than supply. And health officials were criticized for an ad campaign to stop teen use that placed human-sized rat cages in downtown Denver.
Last spring the Vermont Legislature passed a law requiring Shumlin’s administration to create a report about the repercussion of legalizing marijuana. The House Ways and Means Committee was scheduled to hear to testimony Friday on the taxation and regulation of cannabis after the report’s release.
No proposals to legalize marijuana have been received in the Legislature.The report stated few hard answers. It said that many questions can’t be answered in advance, such as whether easing marijuana laws would increase abuse and how to keep it from underage kids and out of other states.
“There is no recipe for marijuana legalization, nor are there working models of established fully legal cannabis markets,” the report said in its closing remarks section. “It must be expected that any initial set of choices will need to be reconsidered in the light of experience, new knowledge, and changing conditions, including federal policy and the policies in neighboring states.”
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