How Much Could Michigan Gain In Marijuana Tax Revenue?
Colorado is flying high (pun intended) with $2 million in recreational marijuana taxes from January alone.
If this trend continues, Forbes reports, the Centennial State could see more than $40 million in additional tax revenue this year.
This got us at Benzinga wondering how much our own state (Michigan) and the struggling Motor City could benefit from pot taxes. Let's do some math.
If Colorado can accumulate $40 million in additional tax revenue with a population of about 5.2 million people, we can roughly estimate (with a little high school algebra) that Michigan's population of 9.9 million could generate about $76.2 million. Detroit's population of approximately 700,000 alone could get about $5.4 million.
A 2005 study by economist Jeffrey Miron estimates that the state of Michigan spends $158 million annually on police, judicial and corrections costs of marijuana prosecutions. The study also estimates that the state could gain between $28 and $32 million in additional revenue from legalized, taxed marijuana.
If we take the money that would be saved in criminal justice costs from legalizing marijuana ($158 million) and add it to the lower estimate ($28 million), we get an additional $184 million in tax revenue available for the state.
Pat Oglesby is a lawyer and the founder of the Center for New Revenue, a not-for-profit corporation that looks a new sources of revenue with a focus on marijuana taxes. He told Benzinga that the official estimates of marijuana tax revenue for Colorado and Washington are $20 per person, per year. If we multiply this by Michigan's population of 9.9 million million people, we get a whopping $198 million.
But that's only about $14 million for the city of Detroit. This number seems rather small compared to the $18 billion the city owes in secured and unsecured debt.
"It's not a game-changer," Oglesby said, "but every little bit helps."
Response to taxed marijuana
There's little opposition to taxing legalized marijuana. Leading industry analyst and 420 Investor Alan Brochstein told Benzinga that even with taxes, marijuana prices will ultimately be lower to consumers than on the black market before legalization.
“Another point is that the taxes can be earmarked, as in Colorado, for positive social good, like public schools,” he said. “So, this is a case where taxes probably don't bother people too much, as the benefits are so great.”
Brochstein said that although the additional tax revenue could help struggling economies like Detroit, legal marijuana would also help by creating jobs.
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