DENVER (AP) -
A catchy pro-marijuana jingle for Colorado
voters considering legalizing the drug goes like this: "Jobs for our
people. Money for schools. Who could ask for more?"
It's a bit more complicated
than that in the three states - Colorado, Oregon and Washington - that
could become the first to legalize marijuana this fall.
The debate over how much
tax money recreational marijuana laws could produce is playing an
outsize role in the campaigns for and against legalization - and both
sides concede they're not really sure what would happen.
At one extreme, pro-pot
campaigners say it could prove a windfall for cash-strapped states with
new taxes on pot and reduced criminal justice costs.
At the other, state
government skeptics warn legalization would lead to costly legal battles
and expensive new bureaucracies to regulate marijuana.
In all three states asking
voters to decide whether residents can smoke pot, the proponents promise
big rewards, though estimates of tax revenue vary widely:
- Colorado's campaign touts
money for school construction. Ads promote the measure with the tag
line, "Strict Regulation. Fund Education." State analysts project
somewhere between $5 million and $22 million a year. An economist whose
study was funded by a pro-pot group projects a $60 million boost by
2017.
- Washington's campaign
promises to devote more than half of marijuana taxes to substance-abuse
prevention, research, education and health care. Washington state
analysts have produced the most generous estimate of how much tax
revenue legal pot could produce, at nearly $2 billion over five years.
- Oregon's measure, known
as the Cannabis Tax Act, would devote 90 percent of recreational
marijuana proceeds to the state's general fund. Oregon's fiscal analysts
haven't even guessed at the total revenue, citing the many
uncertainties inherent in a new marijuana market. They have projected
prison savings between $1.4 million and $2.4 million a year if marijuana
use was legal without a doctor's recommendation.
"We all know there's a
market for marijuana, but right now the profits are all going to drug
cartels or underground," said Brian Vicente, a lawyer working for
Colorado's Campaign To Regulate Marijuana Like Alcohol.
But there are numerous
questions about the projections, and since no state has legalized
marijuana for anything but medical purposes, the actual result is
anyone's guess.
Among the problems: No one
knows for certain how many people are buying black-market weed. No one
knows how demand would change if marijuana were legal. No one knows how
much prices would drop, or even what black-market pot smokers are paying
now, though economists generally use a national estimate of $225 an
ounce based on self-reported prices compiled online.
"It's difficult to size up a
market even if it's legal, certainly if it's illegal," said Jeffrey
Miron, a Harvard University economist who has studied the national tax
implications of the legalization of several drugs.
In Colorado, the $60
million figure comes from Christopher Stiffler, an economist for the
nonpartisan Colorado Center on Law & Policy. He looked at the
state's potential marijuana market in a study funded by the
pro-legalization Drug Policy Alliance. The figure comes from a
combination of state and local taxes and projected savings to law
enforcement.
Marijuana smokers and
dealers, he argued, pay a premium now because the drug is illegal, and
if government can find a way to capture that excess, tax collections
should rise.
"You can basically take
advantage of economies of scale, and the price of marijuana will go down
and government can come in and capture the difference," Stiffler said.
The biggest unknown: Would the federal government allow marijuana markets to materialize?
When California voters
considered marijuana legalization in 2010, U.S. Attorney General Eric
Holder warned that the federal government would not look the other way
and allow a state marijuana market in defiance of federal drug law.
Holder vowed a month before the election to "vigorously enforce" federal
marijuana prohibition. Voters rejected the measure.
Holder hasn't been as vocal
this year, but that could change. In early September, nine former heads
of the U.S. Drug Enforcement Administration called on Holder to issue
similar warnings to Colorado, Oregon and Washington.
That political uncertainty could translate into states spending thousands of dollars to defend the laws, critics say.
"I think it's important
that this ballot lay out for the voters how much litigation is going to
result from this," said Colorado assistant Attorney General Michael
Dougherty, a critic of the legislation.
Legalization proponents
counter that some of the 17 medical-marijuana states already collect pot
taxes in violation of federal law, which does not condone medical use
of the drug. Colorado collects several million dollars a year in
pot-related taxes, including sales taxes, licensing fees and fees paid
by patients to acquire the drug. Oregon last year doubled the cost of a
medical marijuana card to raise money for things like clean water and
school health programs.
"Marijuana can be
regulated, can be taxed, can be sold. We're doing it now, just currently
to sick people," said Vicente, the lawyer working on the Colorado
legalization campaign.
Backers concede there are
big questions about how marijuana would be taxed and regulated, but they
are hoping to sell voters on taking the chance.
"We're like Star Trek.
We're heading into a new world," said Art Way of the Drug Policy
Alliance, answering tax questions recently posed by law students
gathered at the University of Denver to learn about Colorado's
initiative.
In the end, voters deciding
the marijuana questions won't be making up their minds based on the
impact on taxes, said Miron, the Harvard economist.
"It's small potatoes,"
Miron said of marijuana's tax implications. "I'm as firmly in the
pro-legalization camp as anybody in the world, but it's because I think
smoking marijuana is not the government's business.
"That is the question - not whether it will produce revenue, but whether these drugs should be legal."
