• January 21, 2021

Cash-Strapped States Look to Weed for Revenue

 Cash-Strapped States Look to Weed for Revenue

As the pandemic stretches into yet another month, President Donald Trump and congressional Republicans continue to refuse to even entertain sending more direct federal assistance to cash-strapped states. That’s why more governors are looking to marijuana as a way to shore up their state budgets and add more revenue. 

Just this week,  Pennsylvania Gov. Tom Wolf called his state’s legislature to consider legalizing cannabis as part of an overall strategy to help shore up the state’s massive budget shortfall due to the economic shutdown. 

“I’m announcing my fall legislative agenda to provide relief for families, recovery for businesses, and reform for government,” the Democrat tweeted Tuesday. “We have $1 billion in CARES Act funding to help fund these initiatives. I’m also calling for the legalization of recreational marijuana.”

The District of Columbia and 11 states have now legalized marijuana for recreational use, and almost 90 percent of Americans – according to most every poll – are in favor of medical cannabis. All told, more than one in four Americans can now buy cannabis legally, and that number is only expected to increase in the coming years, especially now that COVID-19 has upended state budgets from coast to coast.

In the spring, New Mexico Gov. Michelle Lujan Grisham told her legislature a majority of their constituents  support legalizing  cannabis. The Democrat suggested the state needs to look beyond economic models of the past. 

“If we want economic support and economic relief, then we have to use every economic idea,” Lujan Grisham said. 

While marijuana is decriminalized in New York, that just protects citizens but doesn’t allow the state to reap the tax  revenue politicians there so desperately need.  Deomcratic Gov. Andrew Cuomo has also been pushing his legislature to legalize weed in part to help pay for the state’s projected $10 billion budget shortfall since the pandemic took root in his state first though legislative gridlock – New York-style – derailed the effort earlier this year. 

In Connecticut, Democratic Gov. Ned Lamont is looking to legalize recreational cannabis and even wants to work with other Northeastern states to develop a regional approach to cannabis. Lamont is quick to note that his residents can easily buy marijuana just by driving across the state line into Massachusetts.  

Back in Pennsylvania, Gov. Wolf  – who first proposed legalization last year after previously opposing it – has said that watching what states like Colorado are doing helped bring him around on it. . 

“I think that this might be one way to plug a hole,” Wolf said. 

Colorado sold $1.7 billion worth of weed in 2019 and collected $302 million in revenue for the state. That’s a sliver of the state’s overall budget, but it’s still a lot of money, especially in the middle of a pandemic as Washington political leaders refuse to even consider throwing state governments a lifeline.  

In Colorado, besides funding the regulatory program, a 15 percent excise tax goes to the Building Excellent Schools Today (BEST) Fund, which is used to renew or replace deteriorating public schools. Local governments that allow cannabis sales get shares of state taxes – and local governments are hurting too. 

Every state collects and uses cannabis taxes differently. Washington state levies a 37 percent sales tax, Massachusetts adds a 10.75 percent special sales tax on top of the state’s 6.25 percent general sales tax. Alaska collects $50 per ounce of marijuanasold.

Gov. Wolf is going a step further than his counterparts though.  He’s suggesting Pennsylvania look into selling it through the state itself, something that hasn’t been done by any state or locality that’s embraced legalization.   

“I think it’s also a way that the state could actually get some tax revenue from something that people are evidently already doing,” Wolf said. 

Leland Rucker

Leland Rucker is a journalist who has been covering the cannabis industry culture since Amendment 64 legalized adult-use in Colorado, for Boulder Weekly, Sensi and now TheNewsStation.com. He covered the popular music industry for years, worked extensively in internet and cable news, and co-authored The Toy Book, a history of OK Boomer playthings. Sweet Lunacy, his documentary film co-written and produced with Don Chapman, is a history of the Boulder music scene from the 1950s through the 1980s. He is author and editor of Dimensional Cannabis, the first pop-up book of marijuana.

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