Medical Marijuana

Voters will be asked in November to decide whether marijuana will be legal.

Mamta Popat / Arizona Daily Star

PHOENIX — Arizonans would buy nearly $500 million worth of marijuana a year by 2020 if voters agree in November to allows its use here for recreational purposes, according to a new report.

The Joint Legislative Budget Committee study figures legalization would generate nearly $82 million in taxes when the program is fully implemented. That includes $74 million based on a tax rate of 15 percent of retail costs, with the balance coming from things like licensing dealers and growers.

That puts the price paid by consumers at the cash register north of $490 million.

Legislative budget staffers say $27.8 million of what is collected would go to general aid to education, with an identical amount available to help schools pay for full-day kindergarten.

The analysis was prepared as backers of the initiative prepare to turn in petitions Thursday, June 30, with more than 250,000 signatures to put the issue to voters. Even with a certain percentage likely being disqualified, that should provide a sufficient margin to meet the legally required minimum of 150,642.

Backers of the initiative, funded largely with dollars from the national Marijuana Policy Project, have been touting the financial benefits of legalization. This, however, is the first state-sponsored analysis putting numbers behind the claims.

But Maricopa County Attorney Bill Montgomery, one of the leaders of the opposition, said none of this should sway voters into approving something he considers bad public policy. Montgomery said it does not take into account additional costs from allowing anyone age 21 and older use the drug, from additional addiction treatment and increased accidents to lower work productivity.

And even if that were not the case, Montgomery said there’s less there than meets the eye.

He called the $27.8 million a year in state aid to schools a “pittance,” especially compared with the fact that voters just approved Proposition 123 that will generate more than $300 million a year. Put another way, Montgomery said, the money comes out to less than $26 a year per student in public schools.

By comparison, that $82 million estimate of total revenues from legal marijuana sales by 2020 compares to more than $71 million a year generated in taxes on alcoholic beverages in 2015, the most recent numbers available.

The numbers in the JLBC report differ somewhat from estimates prepared earlier this by the Tax Foundation. That group said legalization of marijuana and the 15 percent tax that would go with it could generate $113 million.

But JLBC analyst Patrick Moran, who prepared the report, said that is based on an assumption that Arizona would have the same level of sales as Colorado. That, he said, is flawed.

“Even prior to legalization of marijuana in Colorado, Colorado had consistently significantly higher rates of marijuana use than Arizona,” he wrote. Moran said recent figures from the National Survey of Drug Use and Health show Arizona had about 587,100 adult marijuana users in 2013, versus 705,900 in Colorado at the same time.

And Moran said there’s something else at work: The Arizona measure would initially cap the number of places where the drug can be sold at fewer than 150, versus nearly 1,500 liquor stores in the state; Colorado has no such cap.

But the JLBC estimate is close to one prepared last year by the Grand Canyon Institute.

The revenues generated by that 15 percent levy on marijuana do not include what state and local governments can collect on top of that in sales taxes.

Moran figures the state tax would generate another $24.8 million 2020, with cities and counties getting about $6.5 million of that in revenue sharing. On top of that, the sales taxes imposed by local governments would generate another $14 million.

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