What is the potential tax take for Medical Marijuana?
As the United States government is looking at various ways to cover the deficit and balance the national budget, there are several ways that are being suggested by the experts. However, a significant tax source is being ignored by the federal government. According to a research by Cato Institute, the legalization of marijuana by the federal government could help in creating a large revenue stream for the administration.
There has been no official research done by the government to determine the size of the medical marijuana market and the impact that its revenue collection would have on the budget. However, analysts believe that legalization would bring more revenue to the sales and income tax departments. A study that was conducted by Cato Institute in 2010 estimated that the legalisation of marijuana would bring nearly $8.7 billion to the federal and state tax revenue per year. While doing this research it was assumed that the tax on marijuana would be similar as to tobacco and alcohol. It was assumed that standard sales and income tax would be applied to the marijuana producers throughout the country.
Estimated Revenue Gain Due to Legalisation of Medical Marijuana
Medical marijuana is already legal in Washington D.C. and Eighteen other states. According to National Cannabis Industry Association, there are ten more states who are considering legalizing medical marijuana. California was the first state to legalize the use of medical marijuana and it has close to 1000 dispensaries
that sell this product according to a 2009 report in The Pasadena weekly. TIME magazine reported that marijuana is the most valuable crop in California as its growers contribute close to $14 billion in sales every year. Based on these inputs Bloomberg Business week reported in 2010 that the legalisation of medical marijuana by the federal government could help in creating a $45 to $100 billion industry.
Estimated Tax’s Saved Due to Legalization of Medical Marijuana
There are several expenses which the governments would save that are spent on the implementation of prohibition of marijuana. According to a paper that was endorsed by nearly 300 economists, The administration would save nearly $13.7 billion of tax revenue, which is spent on the enforcement of prohibition of marijuana. According to a 2007 study done by AlterNet reports, the inmates in the prisons who are sentenced for marijuana trade, cost an additional $1 billion every year to the government. According to a report in Forbes in 2007, the prohibition of marijuana costs tax payers nearly $41.8 billion per year.
It is no surprise that according to a poll conducted by CNBC-Associated Press, 60 percent of the states agreed on the taxation of marijuana and 33 percent of the Americans felt that legalizing marijuana would give boost to the country’s economy.
All the above data suggests that the legalization of medical marijuana by the federal government of the United States would not only result in increased tax revenues, but would also result in the savings of huge sums of money that is spent on the prohibition of marijuana. Legalization of marijuana would also result in the creation of a multi-billion dollar industry which would further result in the creation of more jobs and revenue. What would you like to see with Medical Marijuana in the United States?