Pubdate: Wed, 10 Jan 2018
Source: Boston Globe (MA)
Copyright: 2018 Globe Newspaper Company
Contact: http://services.bostonglobe.com/news/opeds/letter.aspx?id=6340
Website: http://bostonglobe.com/
Details: http://www.mapinc.org/media/52
Author: Katie Zezima

STUDY: LEGAL MARIJUANA COULD GENERATE MORE THAN $132B IN FEDERAL TAX REVENUE

Legalizing marijuana nationwide would create at least $132 billion in
tax revenue and more than a million new jobs across the United States
in the next decade, according to a new study.

New Frontier Data, a data analytics firm focused on the cannabis
industry, forecasts that if legalized on the federal level, the
marijuana industry could create an entirely new tax revenue stream for
the government, generating millions of dollars in sales tax and
payroll deductions.

''When there are budget deficits and the like, everybody wants to know
where is there an additional revenue stream, and one of the most
logical places is to go after cannabis and cannabis taxes,'' said Beau
Whitney, a senior economist at New Frontier Data.

The analysis shows that if marijuana were fully legal in all 50
states, it would create at least a combined $131.8 billion in in
federal tax revenue between 2017 and 2025. That is based on an
estimated 15 percent retail sales tax, payroll tax deductions and
business tax revenue.

The federal government would reap $51.7 billion in sales tax from a
legal marijuana market between 2017 and 2025, entirely new revenue for
a business that remains illegal -- and unable to be taxed - federally.

The business tax rate for the study was calculated at 35 percent. The
corporate tax rate was lowered to 21 percent in a sweeping tax bill
President Donald Trump signed last month.

''If cannabis businesses were legalized tomorrow and taxed as normal
businesses with a standard 35 percent tax rate, cannabis businesses
would infuse the U.S. economy with an additional $12.6 billion this
year,'' said Giadha Aguirre De Carcer, the CEO of New Frontier.

The study also calculates that there would be 782,000 additional jobs
nationwide if cannabis were legalized today, a number that would
increase to 1.1 million by 2025. That includes workers at all ends of
the marijuana supply chain, from farmers to transporters to sellers.

The study estimates that about 25 percent of the marijuana market will
continue to be illicit, and will shrink if the legal marketplace is
not overly taxed or expensive.

''Consumers want to do things legally in general, but they don't want
to do it at too much of a price,'' Whitney said. ''If they go to 7-11
to pick up cannabis, they're willing to pay 10 to 15 percent on top of
what they get on the street. Once they get above that, it slows the
transition and makes the consumer think twice about making that legal
purchase.''

Marijuana is legal for adult recreational use in eight states.
California, the world's largest market, started its recreational sales
on Jan. 1. Twenty-nine states allow the use of medical marijuana. In
the three states where adult use has been legal for the longest period
of time - Colorado, Washington and Oregon - there had been a combined
total of $1.3 billion in tax receipts, according to the study.

The nationwide legalization of marijuana, however, is looking unlikely
under the Trump administration.

While there has been a bipartisan push in Congress to both legalize
marijuana nationally and protect the individual states where it is
legal, Attorney General Jeff Sessions has gone after the industry.

Last week Sessions made it easier for U.S. Attorneys in places where
marijuana is legal to enforce federal law, rescinding Obama-era
guidance that discouraged enforcement of federal marijuana law in
states that legalized the drug.

The decision has been pilloried by the cannabis industry, which argued
that Sessions is trying to stop the momentum of a growing business and
restart the war on drugs. The decision has been harshly criticized
even by some Republicans. Sen. Cory Gardner, R-Colo., threatened to
hold up the confirmation of Justice Department posts in response to
the announcement.

Sessions said he's enforcing federal law, simply directing all U.S.
Attorneys to use previously established prosecutorial principles that
provide them all the necessary tools to disrupt criminal
organizations, tackle the growing drug crisis, and thwart violent
crime across our country,'' Sessions said in a statement.

Some in the industry believe Sessions' actions could force Congress to
step in and regulate the market, or move to legalize marijuana altogether.

''OK, now Congress, do something,'' said Morgan Paxhia, managing
director at Poseidon Asset Management, which invests in marijuana
businesses. ''Here's a chance to do something meaningful that could
move the industry in a much safer direction.''
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MAP posted-by: Matt