Here’s the introduction to the editorial.
Attorney General — and, he hopes, future governor — Mark Herring has proposed that Virginia legalize marijuana. Today, let’s take a closer look at what that would mean in terms of tax revenue.
Ten states (Illinois will make 11 in 2020) and the District of Columbia already have legalized marijuana. Oddly, four of them don’t have any special pot taxes. In the seven that do, annual tax revenues range from $5.2 million in Massachusetts to $319 million in Washington state. Curiously, California is the biggest legal weed state, but not the biggest tax producer. Local press accounts say pot sales in California have been stifled by regulations. As a result, tax revenues there have been disappointing. Other states, though, have seen pot sales — and tax collections — far surpass expectations.
With seven different states, you get seven different ways to disburse the revenue. Even then, there are few simple explanations because there are often multiple taxes with different revenue streams going to different programs. Alaska’s formula is the most straightforward: It puts half of its $11 million in marijuana money in the general fund, and the other half to programs designed to combat recidivism.
The two states that catch our eye the most are Washington and Colorado. Both are close to Virginia in size (we’re 8.5 million, Washington is 7.5 million, Colorado is 5.7 million). Both collect a lot of marijuana taxes — Washington is No. 1 at $319 million, Colorado is No.3 (behind California) at $266.6 million. Both also use their marijuana money in ways that have special applicability to Virginia. There are some details we’ll skip over: Would Virginia impose the same sorts of taxes and the same tax rates? Would Virginians toke up at the same rate as people in those two states? For our purposes here today, let’s assume everything is equal.
Washington dedicates 64% of its pot revenue to health care, with most of that going to Medicaid. This may be of particular interest to Virginia legislators. In 2018, the General Assembly, after years of debate, expanded Medicaid. Medicaid has also turned out to be more expensive than estimated — $202 million more in the current fiscal year and $260 million more in the next fiscal year. Not all those costs are related to expansion — some are due to other factors — but, regardless, it’s costing more. If Virginia replicated either Washington or Colorado, the state would take in more than enough to cover those additional expenses.
