Pubdate: Sat, 11 Aug 2012
Source: Herald, The (Everett, WA)
Copyright: 2012 The Daily Herald Co.
Contact:  http://www.heraldnet.com/
Details: http://www.mapinc.org/media/190
Author: Jerry Cornfield

MEASURE TO LEGALIZE POT COULD BRING BILLIONS TO STATE COFFERS

Legalized Marijuana Might Be a Lucrative Revenue Source for the State 
- -- If the Federal Government Were to Permit It.

OLYMPIA -- If voters pass Initiative 502 this fall allowing adults to 
legally grow, sell and smoke marijuana, it could spur an economic 
boon generating a half-billion dollars a year for the state coffers.

Or it could wind up a financial bust and not bring in a dime.

It all depends on what federal authorities decide to do, because just 
about everything the measure seeks to achieve will still violate federal law.

"The total fiscal impact is indeterminate due to the significant 
uncertainties related to federal enforcement of federal criminal laws 
related to marijuana," concludes a report issued Friday on the fiscal 
effects of the initiative.

And the measure could cost state agencies up to $65 million in the 
next five years to set up rules for licensing, regulating and taxing 
sales of marijuana, as well as the services the initiative seeks to fund.

The analysis prepared by the state Office of Financial Management 
will be included in voter pamphlets this fall.

Initiative 502 would make Washington the first state to legalize 
recreational use of marijuana by those 21 years and older.

It would create a new industry of producers, processors and sellers 
of marijuana products, and put the state Liquor Control Board in 
charge of regulating it. The agency would license wholesalers and 
retailers with licensees paying $1,250 the first year and $1,000 
annually to renew.

With each purchase, a buyer of a marijuana product would pay the 
regular sales tax plus a heavy excise tax similar to what occurs now 
with alcohol.

State analysts concluded the amount of revenue generated could be as 
low as zero, if the feds clamp down, or as high as $2.14 billion over 
the next five fiscal years, with a fully functioning and regulated 
marijuana market.

What such a market might look like is educated guesswork. Those 
analysts relied on a national profile of marijuana users and 
statistics of their consumption to come up with an estimate of 
363,000 marijuana users in Washington if the law passes. They predict 
each would consume 2 grams per use at a price of $12 per gram, with taxes.

Friday's report echoes findings provided in a report to lawmakers 
during the legislative session earlier this year.

"We don't know what the federal government will do," said Alison 
Holcomb, campaign director for New Approach Washington that is behind 
the measure.

But initiative opponent Philip Dawdy, media director for Safe Access 
Alliance, said he thinks "it is pretty dubious the state will see 
millions and millions of dollars from a legal marijuana market. I'm 
pretty convinced the feds are going to put a straitjacket around it."

In states such as Washington where medical marijuana use is allowed, 
federal authorities have not moved to overturn the laws or shut down 
the production of marijuana for medicinal purposes, Holcomb said.

But Steve Sarich, spokesman for the No on I-502 effort, said federal 
authorities are shutting down licensed medical marijuana dispensaries 
in Colorado and California.

"Why do we think the federal government will treat Washington state 
any different?" he said.

Meanwhile, sales of medical marijuana in Washington are helping 
cities, counties and the state pay a few bills.

Licensed dispensers of marijuana for medical purposes paid $755,764 
in taxes on nearly $6 million in sales in 2011, according to figures 
from the state Department of Revenue.

Of the total, $582,731 landed in the state's general fund to pay for 
day-to-day expenses in public schools, health care and criminal 
justice. The remainder was distributed to local governments.

Under I-502, a portion of money would go into the general bank 
accounts of cities, counties and the state government. A big chunk 
would be earmarked for substance abuse prevention, research, 
education and health care programs.

One of the missing elements of the report is how much the government 
might save by no longer treating marijuana use as a crime, Holcomb said.

An analysis done for a legislative committee earlier this year 
suggested money could be saved by having several thousand fewer cases 
in the courts each year involving adults arrested for possession of 
small amounts of marijuana.

She said voters need to think about whether the money spent on such 
prosecutions "is a dollar well spent or a dollar flushed down the toilet."
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MAP posted-by: Jay Bergstrom