How Are States That Have Decriminalized Marijuana Faring?
In Connecticut lawmakers ended their regular legislative session on Wednesday without reaching an agreement on the state’s next two-year budget. They are hoping to do that in special session before the end of the month.
At issue is a projected $5 billion deficit in the roughly $40 billion impending two-year state budget. One controversial new revenue source lawmakers are considering to help close that gap is the legalization of the recreational use of marijuana.
WSHU’s Senior Political Reporter Ebong Udoma has been looking into this and joined Morning Edition Host Tom Kuser to discuss what he has learned. Below is a transcript of their conversation.
Ebong, how much support is there in the legislature for the legalization of marijuana?
Tom, even though our neighboring state of Massachusetts has recently legalized recreational marijuana, Connecticut legislative leaders didn’t believe they had the votes to pass a stand-alone marijuana legalization bill. But they’d like the revenue so they are hoping to bring it up during budget negotiations. Here’s how House Speaker Joe Aresimowicz, a Berlin Democrat, explained it.
When you are talking about marijuana within the discussions of a budget and deciding what’s more important and on its face what’s more objectionable...that could change.
Since Massachusetts legalized recreational use of marijuana, what type of revenue are they making?
They are still setting up their legal framework so there’s no revenue to speak of. I checked with Colorado, a state that has pioneered legal pot in the past three years. I spoke with Colorado’s Department of Revenue Executive Director Barbara Brohl. Here’s what she told me.
From the prospective of taxation, it has brought in $423 million in tax revenues since January 1, 2014. Last year it brought it about $141 million. And this year so far, from July to date, it’s brought in almost $175 million.
$175 million and there’s still a month to go before the end of the fiscal? And I understand overall sales are more than a $1 billion a year?
That’s correct. Brohl says Colorado taxes marijuana three times.
There’s a 15 percent excise tax on the first transfer of unprocessed marijuana from a cultivation or growth facility. And then there is a 10 percent special sales tax at the point of sale. And then a 2.9 percent regular sales tax. But the other things that’s kind of interesting is that there are some industries that have kind of built up around this industry. In other words, we had a lot of warehouse space that was not being used…our warehouse space is now fully rented. We have businesses that now do security around this industry. We have businesses that do a lot of the electrical work, a lot of the construction work in building the cultivation rooms and things like that.
So Ebong, does the revenue from the marijuana sales help Colorado’s general fund?
No. Actually Colorado voters decided on how the money should be spent. Here’s what Brohl told me.
So all of this taxation money is to be used for marijuana purposes with the exception of the excise tax. The excise tax goes for school construction and the public school fund – so it all goes to schools – and the other retail sales tax goes to first funding marijuana enforcement division that’s in my department.
Ebong, I heard Governor Dannel Malloy say he wouldn’t expect much revenue from a marijuana tax because marijuana can be homegrown. How’s Colorado dealing with that?
They passed a law allowing a maximum of 12 plants per home.
How about the fact that the marijuana industry is a cash economy?
Brohl says Colorado has been able to handle that.
We know how to collect taxation money and other fees in cash. We actually, until about a year ago, weren’t able to utilize credit cards in our DMV offices so we had to either accept cash or checks. And most people don’t have checks so they’d have to bring in cash. So we know how to handle cash and we have a dual control cash counting room.
And Tom, you know they also have a way of tracking every marijuana plant through a Radio-Frequency ID system.
Yes. Here’s Brohl again.
We have what we call a metric system that is Marijuana Seed to Sales Tracking System. You have to use RFID technology which allows for the tracking of marijuana from the time it is an eight-inch plant all the way through to sale. And the tax division has access to that data as well, so it knows when marijuana is moving. It knows how much is being moved from a cultivation so how much excise tax should be paid.
That’s quite impressive. I guess it means if Connecticut adopts Colorado’s best practices, we could start realizing revenue from marijuana legalization by the second year of the biannual budget.
Probably. That might be a selling point when the idea is considered during budget negotiations.
Well, we’ll see how that works out. Thank you, Ebong.
Thank you, Tom.