Many of our more liberal states are looking for additional sources of revenue. Unfunded liabilities and expanded welfare programs and medical programs have been very expensive to the states that have embraced them. One thing that many states are looking at to increase tax revenue is the legalization of marijuana. On Saturday, Yahoo Finance posted an article about how much income legal marijuana is actually generating in California.
The article reports:
California’s legal cannabis revenue isn’t growing as fast as many state officials anticipated, recent data suggests. And one industry expert believes that taxes and a still thriving black market for marijuana, are partly to blame.
“The legal market is struggling with the set of regulatory rules and tax rates that are pretty onerous and make it fairly uncompetitive versus a thriving black market that’s had the whole industry for 60 years now,” Tom Adams, BDS Analytics managing director, told Yahoo Finance’s YFi PM in an interview this week.
California’s marijuana excise tax produced $74.2 million in revenue for the second quarter of this year, according to the California Department of Tax and Fee Administration.
Yet back in January, Governor Gavin Newsom’s proposed budget predicted the state would generate $355 million in excise tax revenues for the fiscal year. That projection was later revised down again to $288 million back in May.
The shortfall is reminiscent of Michigan, where a nascent medical marijuana market has resulted in lower than expected revenue.
Adams contended the legal market faces additional expenses like the cost of testing, that the illegal market does not.
Meanwhile, there is evidence that marijuana is harmful to the developing brains of young adults. There also may be a link between marijuana and mental illness.
In January 2019 I posted an article which stated:
After an exhaustive review, the National Academy of Medicine found in 2017 that “cannabis use is likely to increase the risk of developing schizophrenia and other psychoses; the higher the use, the greater the risk.” Also that “regular cannabis use is likely to increase the risk for developing social anxiety disorder.”
…These new patterns of use have caused problems with the drug to soar. In 2014, people who had diagnosable cannabis use disorder, the medical term for marijuana abuse or addiction, made up about 1.5 percent of Americans. But they accounted for eleven percent of all the psychosis cases in emergency rooms—90,000 cases, 250 a day, triple the number in 2006. In states like Colorado, emergency room physicians have become experts on dealing with cannabis-induced psychosis.
Cannabis advocates often argue that the drug can’t be as neurotoxic as studies suggest, because otherwise Western countries would have seen population-wide increases in psychosis alongside rising use. In reality, accurately tracking psychosis cases is impossible in the United States. The government carefully tracks diseases like cancer with central registries, but no such registry exists for schizophrenia or other severe mental illnesses.
On the other hand, research from Finland and Denmark, two countries that track mental illness more comprehensively, shows a significant increase in psychosis since 2000, following an increase in cannabis use. And in September of last year, a large federal survey found a rise in serious mental illness in the United States as well, especially among young adults, the heaviest users of cannabis.
Is the extra tax revenue worth it?