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Report: Legal marijuana boosts government revenue – a little

Marijuana plants grow at the Desert Grown Farms cultivation facility June 28, 2017, in Las Vegas. A new report finds that legalizing and taxing marijuana boosts revenue for state and local governments, but not by much. (John Locher / Associated Press)
Marijuana plants grow at the Desert Grown Farms cultivation facility June 28, 2017, in Las Vegas. A new report finds that legalizing and taxing marijuana boosts revenue for state and local governments, but not by much. (John Locher / Associated Press)

A new report finds that legalizing and taxing marijuana boosts revenue for state and local governments, but not by much.

The credit rating agency Moody’s Investor Service says in a study released Tuesday that legalizing recreational use of marijuana brings governments more money than it costs to regulate it.

Despite high taxes on the legal sales of the drug, the revenue accounts for a small portion of government budgets. In Colorado, the first state to legalize recreational use, a marijuana tax brings in the equivalent of about 2 percent of the state budget.

In Washington state, gross revenue from marijuana legalization equaled 1.2 percent of general fund revenue in the 2015-17 state budget.

Most of the states that have legalized marijuana earmark the revenue for law enforcement, drug treatment and other specific programs, which doesn’t help the states’ financial flexibility.

Likewise, Moody’s described the revenue effect as minimal on local governments in states with legalized pot.

Creating revenue for the state is one argument proponents use for legalization in New Jersey. Gov. Phil Murphy, who supports the effort, is planning on having an additional $60 million in taxes from legalized marijuana in the next fiscal year. That’s less than 1 percent of the state’s annual spending.

Twenty-nine states now allow marijuana for either medicinal or recreational uses, and the business is growing quickly. Moody’s cited data from the market research firm Euromonitor International that projects it will grow from a $5.4 billion business in the U.S. in 2015 to $16 billion by 2020.

Meanwhile, illegal marijuana sales are estimated at $40 billion.


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