As of the November 2016 election, eight states and Washington, DC, have legalized both medical marijuana and adult recreational marijuana. Another 20 states now have legal medical marijuana programs, which protect citizens whose doctors recommend marijuana as part of medical treatment for debilitating and chronic illnesses.
Sixteen more have passed legislation that allows for the compassionate use of marijuana-derived CBD oils for children with seizure disorders.
Six states allow industrial hemp and 20 have decriminalized simple marijuana possession. Only two states in the country, West Virginia and Indiana, have strict industrial hemp laws, and just one state, Nebraska, has decriminalization only.
This leaves just three states in the nation without any pro-cannabis law on the books. The harsh marijuana laws of Kansas, South Dakota and Idaho have never been reformed in any way. These states are islands of draconian Prohibition, surrounded by states with at least one reform of their marijuana laws. Citizens of these states have only the possibility of fines and jail time for anything related to cannabis.
Arguments against cannabis reform in these states include: increased access for children, concerns regarding impaired driving, and the fact that marijuana continues to remain a Schedule I substance in the federal Controlled Substances Act (CSA).
Some Opponents argue that marijuana hasn’t been vigorously researched according to FDA standards. Some even deny the beneficial revenue derived from taxes in states that have legalized marijuana.
Some Opponents argue that marijuana hasn’t been vigorously researched according to FDA standards. Some even deny the beneficial revenue derived from taxes in states that have legalized marijuana.
Elisha Figueroa, the director of the Idaho Office of Drug Policy, wrote an article with such a denial. Published as an opinion piece in September 2016 in the Idaho State Journal, she quotes Andrew Freedman, director of the Colorado Governor’s Office of Marijuana Coordination, and Dave Rodrigues, executive director of the Northwest High Intensity Drug Trafficking Area, to support her argument that revenue and taxes from legalization in Colorado and Washington are “not providing the relief once promised.” Freedman calls legalization for tax revenue a “red herring” and a “myth,” and Rodrigues believes that “many of the reported outcomes show the exact opposite of the goals that sold the initiative to the voters.”
According to a Tax Foundation Special Report titled “Marijuana Legalization and Taxes: Lessons for Other States from Colorado and Washington” by the independent tax policy research organization, the numbers coming in from Colorado and Washington tell a different story.
In Colorado, voters were promised a $70 million dollar tax revenue from legalization, with $40 million reserved for the public schools and the other $30 million for other needs of the state budget. Voters approved this promise with Amendment 64 in November 2012, and retail marijuana sales began on January 1, 2014. Since then, Colorado marijuana tax revenue had a slow start, but now “greatly exceeds original estimates of $70 million per year.” CNN.com confirms this and points out that in Colorado’s first fiscal year of legalization—with the effective tax rate on marijuana totaling 29%—retail marijuana sales produced $106 million in tax revenue. The collections in 2015 increased to $163 million.
Tax Foundation reports that “marijuana tax revenues were twice those of Colorado alcohol taxes in 2015.” Tax collections are estimated to exceed previous years for 2016, possibly quadruple the revenue of alcohol taxes. Because of concerns that the tax rate was too high and contributed to continued black market sales, Colorado intends to implement a reduction in marijuana taxes for 2017.
Washington retail sales began around the same time as in Colorado, after voters approved Initiative 502 in November 2012 with a promise of “as much as $1.9 billion over five years, 40% going to the state general fund and local budget, and the remaining 60% intended for substance abuse prevention, research, education
and health care.”
Beginning in July 2015, a neutral 37% excise tax—compared to the 104% effective tax rate on cigarettes and 11% effective tax rate on alcohol—was imposed on marijuana. This came after a brief struggle with separate taxes on processors, retailers and sales. Almost $77 million in marijuana-related taxes was collected from July 1, 2015 to June 30, 2016. Tax Foundation stated in April 2016 that sales averaged over $2 million a day, which would mean excise tax revenue could reach
$270 million this year.
Even the experiences in Oregon and Alaska, which recently legalized recreational cannabis, are contrary to the Idaho Drug Czar’s article. Oregon collected $3.48 million in taxes on recreational marijuana in the first month of legal sales—three times the official revenue projections. Tax Foundation anticipates “future revenue could reach around $60 million per year.” In a comment for Alaska Dispatch News, Ken Alper, director of the Department of Revenue’s tax division, said “the state’s annual estimate is $12 million,” but noted that in Colorado, Oregon and Washington, tax revenues have “far exceeded forecasts.”
Washington, DC, which has faced legal hurdles regarding the use of funds to enforce legalization of a substance that remains illegal on the federal level, anticipates $20 million a year in tax revenue once red tape is removed.
Other potential contributions to state economies go beyond the taxes imposed on recreational marijuana. Medical marijuana taxes, license fees, business fees, business taxes, non-marijuana products such as pipes and accessories, and non-marijuana (but related) businesses taxes all contribute to the growing economic boost that legal cannabis may provide. New products and new jobs also benefit legal marijuana states.
Taxes and business revenue aren’t the only way to balance a state budget. No longer using taxpayer dollars to arrest, incarcerate and prosecute marijuana consumers will save money and is more logically affordable to the states than continued prohibition.
According to Jon Gettman, PhD, in the Bulletin of Cannabis Reform for DrugScience.org, Idaho spent $28.87 million on marijuana-related expenses, out of a $685 million budget for criminal justice in 2006.
This figure was determined by the Office of National Drug Control Policy (ONDCP)’s formula to generally estimate the criminal justice costs of drug‐related arrests. Dr. Gettman points out that “estimating costs of different types of arrests is a very complicated challenge because of the differences between individual offenses and the investigative and follow‐up work they require,” but goes on to demonstrate that the use of the percentage basis method can provide a general estimate of marijuana-related criminal justice costs.
The ONDCP’s method is to first calculate the percentage of total arrests by the specific type of arrest and then to apply that percentage to total criminal justice system costs. For example, Dr. Gettman estimates that of the “74,520 arrests in Idaho in 2006, there were 3,140 marijuana arrests that year, accounting for 4.21% of all arrests in Idaho for 2006. Consequently, according to this percentage basis method of estimation, marijuana arrests cost $28.87 million in Idaho for 2006.”
Data from the Idaho State Police’s report on Idaho drug- and alcohol-related arrests and charges for 2006–2013, showed “a sharp increase in the rate of drug charges involving marijuana between 2012 and 2013, moving from 14.5% in 2012 to 43.3% in 2013.”
Idaho legislative reports also show a decrease in state spending on criminal justice costs, and even in total arrest figures. Out of the 62,914 total arrests in Idaho in 2013, 12,236 were for drug offenses and, of those, 5,289 were marijuana-related. This accounts for 8.4% of arrests in Idaho for 2013.
The total criminal justice budget for Idaho in 2013 was smaller than in 2006—with the total number of Idaho arrests being smaller—but the total number of Idaho marijuana-related arrests was larger. Whether this is related to neighboring state (Oregon and Washington) legalization is speculative, but the numbers are clear. Following the same calculation method used by the ONDCP and Dr. Gettman, figures show that of Idaho’s $262.4 million criminal justice budget in 2013, $22.04 million* was spent on marijuana users.
*This figure does not include fiscal statistics relating to child welfare prosecutions or state budget spent on social services, such as foster care costs, parental assessments, chemical dependency services, and other Idaho Department of Health and Welfare expenditures relating to marijuana in Child Protective Services (CPS) cases.
An example is the case of Kelsey Osborne, a Gooding, Idaho, mother currently being prosecuted for giving her three-year-old cannabis butter during seizures and hallucinations purportedly caused by withdrawal from the antipsychotic drug, Risperdal.
Also of note, Idaho Governor Butch Otter vetoed a CBD affirmative defense bill passed through the Idaho House and Senate in 2015. The proposed law would have provided this mother a defense in court for her action of treating her daughter’s condition with cannabis.
Idaho spends approximately $20–$30 million each year to arrest and prosecute marijuana users. To many, this appears to be a waste of state resources, especially when legalized states predict adding twice that amount to the budget from taxes related to marijuana sales each year.
While numerous states, like Idaho, refuse to stop spending millions of taxpayer dollars each year on incarcerating non-violent offenders, the race for cannabis freedom has already started for the rest of the country.
States have begun to acknowledge the potential that legalization has for boosting their economy. Many lawmakers actively seek ways to implement the collection of taxes, revenue and numerous benefits of marijuana reform. With California, Nevada, Massachusetts and Maine now joining Colorado, Washington, Oregon, Alaska and Washington, DC, in reform of outdated marijuana laws, the push for legalization is building momentum.
Idaho appears to need a citizens’ effort to reform marijuana laws, because of the attitudes of local politicians and other opponents. Idaho native, Russ Belville, points out in a HighTimes.com article that it’s important to stop waiting for politicians to change marijuana laws. “It’s not a matter of when they are going to change the laws; it’s a matter of when you are going to change the laws,” states Belville.
It’s difficult to imagine the citizens of illegal states willing to be stuck on the wrong side of history or left behind in the proverbial dust of the new “billion dollar” green rush when there is money to be made.
Despite opposition on the state level, Idaho’s citizens are still trying to change their laws. Idaho currently has a medical marijuana petition being circulated through the Idaho Medical Marijuana Association. With enough signatures, medical marijuana could be on the 2018 ballot.
In the meantime, cannabis entrepreneurs and business investors wait for the untapped markets in states like Idaho to open up through law reform. Many eagerly await the state’s acceptance of the profits and industry that marijuana and hemp have to offer.
Green Majority, a new business venture, hopes to become Idaho’s first medical marijuana dispensary. CEO Koby Conrad is “just waiting for laws to change so that Green Majority can operate legally.”
He hopes to open their doors and start helping Idaho patients as soon as possible.
In the meantime, Green Majority has pledged that the content of their website and “all efforts will revolve around promoting the legalization of cannabis in Idaho to help to change the current archaic laws.”
Originally published in CannaBiz Journal -
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