Lawyer Issue: Recreational Marijuana’s Economic Advantages

Article by Anne van Leynseele, Lawyer Issue

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As Seattle City Attorney Pete Holmes has famously touted, marijuana prohibition and the war on drugs has failed.[1]Evidence does not suggest that the War on Drugs reduced drug-use rates or drug dependency.[2] At any given time, there are at least 137,000 men or women locked in prison or held in jail on drug possession charges, according to the ACLU and Human Rights Watch.[3] Additionally, the ACLU and Human Rights Watch report, citing FBI data, suggests that police and local law enforcement nationwide make more arrests for marijuana possession alone than for all violent crimes combined.[4] The local evidence suggests the same; in the first two years, law enforcement saw a decrease in work load anecdotally attributed to lack of those possession arrests, and now the Washington State courts are seeing the same.

The Washington recreational marijuana market has now been in effect for three years, and while the law has changed rapidly during that time, the economic benefits have clearly proven themselves. As the Washington and Colorado markets expanded, being the first two states to legalize adult and recreational use of marijuana products, other states began to take notice of how lucrative the legalized marijuana market could be, as both Washington and Colorado generated nearly 70 million dollars in tax revenue alone in each their first complete fiscal years.[5] It is clear that recreational marijuana turned the tide of the War on Drugs, and forced it to become an economic benefit that is becoming increasingly enticing to the rest of the nation.

Washington State’s Weed Economy
While Initiative 502 was voted for in November of 2012, the first Washington state producer and processor licenses were not issued until March 5, 2014.[6] In the 2014 fiscal year[7], a total of 279 producer/processor licenses were issued, and the Washington State Liquor and Cannabis Board (WSLCB) only generated 1.78 million dollars in total marijuana related income, which is impressive for how small the industry was, and for only 3 months of revenue generated during that fiscal year.[8]

The 2015 fiscal year, however, as the first complete fiscal year after legalization, showed real promise for the legalized marijuana industry:  total shelf price[9] sales generated nearly $260 million dollars, and generated $64.63 million dollars in tax revenue alone, as well as $1.08 million in just licensing fees and other related costs while the state was operating at only a 25% excise tax.

The 2016 fiscal year for Washington compounded on industry success, nearing $1 billion dollars of total shelf price sales, and created a total tax obligation of almost $186 million.[10] Much of this increased tax revenue can be attributed to the implementation of Senate Bill 5052 and House Bill 2136 in July of 2015, which, among other things, changed the state excise tax from 25% to 37% at the point of sale, and merged the less regulated medical marijuana market with the regulatory system established by I-502.

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