The Tax Foundation is a think tank focused around tax policies in the United States. A couple of weeks ago they released a study analyzing what legalizing marijuana across the country would do in terms of generating tax revenue.
- Marijuana tax collections in Colorado and Washington have exceeded initial estimates.
- A mature marijuana industry could generate up to $28 billion in tax revenues for federal, state, and local governments, including $7 billion in federal revenue: $5.5 billion from business taxes and $1.5 billion from income and payroll taxes.
- A federal tax of $23 per pound of product, similar to the federal tax on tobacco, could generate $500 million per year. Alternatively, a 10 percent sales surtax could generate $5.3 billion per year, with higher tax rates collecting proportionately more.
- The reduction of societal risk in being engaged in the marijuana trade, as well as the inclusion of taxes, will combine to reduce profits (and tax collections) somewhat from an initial level after national legalization.
- Society pays all the costs regardless of legality but tax revenues help offset those costs.
They point out that the national market for marijuana is already estimated to be generating $45 billion per year for people dealing in marijuana (legal and illegal). As Colorado has already shown, you can use some of that tax money to fund important programs like education and drug treatment.