Pubdate: Sun, 23 Sep 2012
Source: Macomb Daily, The (MI)
Copyright: 2012 The Macomb Daily
Contact:  http://www.macombdaily.com/
Details: http://www.mapinc.org/media/2253

POT TAX COULD BE WINDFALL

Associated Press

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?

That political uncertainty could translate into states spending
thousands of dollars to defend the laws, critics say.
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MAP posted-by: Matt