THE PATH FOR POT T
PROFITS NOT AS HIGH AS EXPECTED By Jordan Grose / Gavel Media Staff
he early returns from Colorado’s legalized recreational
marijuana experiment are in. The question that remains is whether Massachusetts can afford, both financially
and socially, to adopt a similar plan for marjiuana taxation.
Colorado governor John Hickenlooper predicted that within six months of the legalization of recreational marijuana, recreational sales would reach the $190 million region. In the single month of January 2014, Colorado sold about $14 million worth of pot, a number that may seem high for just one month. However, extrapolating from the monthly rate of $14 million would put Colorado at about $84 million in pot sales after these six months, $106 million dollars short of the predicted number. Since pot sales were not initially as high as expected, tax revenues on legalized pot, in turn were not ideal. The reasons for this slow start are generally attributed to the stigma associated with legalized recreational marijuana. Pot sales is a topic that divides people and generates opposition and frustration. Voices on both sides of the argument have made themselves heard with regards to the social, financial and moral consequences of recreational pot, causing confusion over a clear path forward. In the month of January, the state of Colorado received $3.5 million in total marijuana-related tax revenue. Although Colorado claims that these revenue profits will be wisely spent on programs to prevent addiction
and substance abuse in young adults as well as to build new schools throughout the state, a closer look must be taken at the social and economic consequences of increased prices for pot. “They’ve got a pretty low tax rate. There’s so many moving pieces. You’ve got to keep it low enough,” says Pat Oglesby, founder of the Center for New Revenue, on Colorado’s taxation policy. Oglesby is shedding light on the emergence (or disappearance) of a black market as a result of higher prices for recreational pot. While illegal pot can be easily purchased at low prices, price inflation for legalized pot could quite possibly encourage the continuation of black-market marijuana. Based on the numbers in the recent months for Colorado revenue, the predicted potential annual tax revenue from pot in Massachusetts is $30.74 million. This comes out to roughly 0.1% of the Massachusetts Fiscal Year 2014 budget, $34 billion. Plainly put, these predicted numbers are not nearly as promising as Colorado’s profits. Recreational pot would not be as profitable in Massachusetts primarily due to the fact that Massachusetts would have but a
fraction of the dispensaries that Colorado has. In addition, Massachusetts has only recently allowed the use of medical marijuana. The fact remains, that profits, however low, still mean more money — and states need money. “It would be unfortunate if efforts to legalize marijuana for recreational use here in the commonwealth suffer because of perceived early setbacks of the medical marijuana program,” said Kevin Frank, former spokesman for Massachusetts governor Deval Patrick. Powerful members of the Massachusetts government are also in favor of recreational pot not only because it will bring in revenue, but also because it will lessen the number of weedrelated crimes that burden the state with enforcement costs. Frank is of the opinion that opposition to the legalization of marijuana only further complicates a resolution, which in turn drives up costs for real addiction solutions. The general consensus is that it is still too early to accurately predict the best resolution to the issue of legalized marijuana in Massachusetts. Government officials want to observe how legalized pot plays out in Colorado before any strict resolutions are implemented. Despite this anxiety, however, liberal Massachusetts is intrigued and even invested in the potential path for pot.
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