Marijuana Negative Solvency

AT Legalization/State Economy Adv

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Marijuana Neg
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AT Legalization/State Economy Adv

at: state budgets

Revenue from marijuana taxes is unpredictable and slow

Boesen 20---Senior Policy Analyst with the Center for State Tax Policy at the Tax Foundation. (Ulrik, “Can States Close Budget Deficits with Excise Tax Hikes?”, Tax Foundation, April 15th, 2020,
Recreational Marijuana
Diminishing receipts from traditional sources of revenue combined with stories of growing marijuana sales might make some states consider a legalization of and excise tax on marijuana.[27] Though very unlikely to deliver short-term revenue, legalization can be part of a revised revenue picture in the years ahead. However, given the novel nature of the markets, states should expect some volatility in revenue and should not appropriate revenue to arbitrary spending priorities.
In the states that have legalized so far, it has generally taken some time for markets to become capable of delivering sizable returns. There are significant costs associated with building the system required to operate a recreational marijuana industry.[28]
These lessons have prompted states to be cautious in revenue projections and appropriations rather than to present legalization as a long-term budget fix. As an example, New York Governor Andrew Cuomo (D), who has tried and failed to legalize marijuana for the past two years, [29] had proposed a budget with a projected revenue of a mere $20 million in a first year of legalization. In Maryland, a commission that was working on potential legalization pushed back any further action due to the complexity of the regulation.[30] To add to the complexity, any federal action on marijuana could skew the projections in any direction.
It is important to get the regulatory and tax structure right as brick-and-mortar dispensaries will be competing with black and gray markets, and setting tax rates too high could keep consumers in untaxed markets.

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