Several economic studies have been conducted to project tax revenue from yearly marijuana sales. The following chart summarizes the studies, and the graph displays the first-year revenue projections. To learn more about the studies, or read them in their entirety, scroll down.
The Budgetary Implications of Legalizing Marijuana in Oregon
This report estimates the reduction in government expenditure and the increase in tax revenue that would result from legalizing marijuana in Oregon. Legalization would reduce government expenditure by about $70.84 million annually. Legalization would also generate tax revenue of roughly $37.15 million annually if marijuana were taxed at rates comparable to those on alcohol and tobacco.
Dr. Jeffrey Miron
Senior Lecturer and Director of Undergraduate Studies
Department of Economics Harvard University
Abhi Sivasailam Director of Research
American Victory Coalition
Ankur Chawla
Policy Analyst American Victory Coalition
Oregon Cannabis Tax Revenue Estimate
Economists at ECONorthwest conducted an independent study to estimate the amount of money that would be generated in the short term if the Act passes. The money generated in taxes would go to schools, state and local police, and programs for drug treatment, prevention, drug education, and mental health.
The key findings of this analysis are:
- $38.5 million in excise tax revenue would be generated during the first fiscal year of tax receipts;
- $78.7 million in excise tax revenue would be generated during the first full biennium of tax receipts.
ECONorthwest
Beau Whitney Study
Beau Whitney predicts that total FY2017 net revenue forecast of $21.2M (and $46.6M for the biennium) as a baseline and $9.1M (and $22.2M) for FY2017 on the low end.
Beau R. Whitney
Whitney Economics, LLC
The Budgetary Implications of Legalizing Marijuana in Oregon
The initiative, if approved by voters, would legalize and regulate the possession and cultivation of marijuana by adults, and tax the sales of marijuana and related products. We estimate that Initiative Petition 53 will produce up to $81,694,920 in annual tax receipts for the state of Oregon. We also estimate that Initiative Petition 53 could save state and local budgets up to $89,315,347 in annual expenditures, though this estimate is subject to considerable data limitations and should be interpreted carefully.
Abhinav Sivasailam
Director of Research, American Victory Coalition
Ankur Chawla
Researcher, American Victory Coalition
Measure 91: State of Oregon Estimate of Financial Impact Statement
This measure legalizes, regulates and taxes the manufacture, sale and use of marijuana in Oregon. State and local expenditures and revenues will be impacted by passage of this measure.
The measure requires the Oregon Liquor Control Commission (OLCC) to license and regulate the distribution of marijuana. The revenue estimate from taxes when fully implemented may range from $17 million to $40 million annually.
The OLCC estimates that the start-up costs are about $300,000 in state fiscal year 2015, about $2.5 million in state fiscal year 2016, and $1.0 million in 2017. OLCC annual operating expenses are estimated to be $3.2 million per year. New revenues are expected to be sufficient to offset these costs.
The remaining revenue beyond expenses would be distributed as follows: 40% to the Common School Fund, 20% to the Mental Health Alcoholism and Drug Services Account, 15% to the State Police Account, 10% to cities for law enforcement, 10% to counties for law enforcement, and 5% to the Oregon Health Authority for alcohol and drug abuse prevention, early intervention and treatment services.
The Oregon Health Authority estimates $200,000 per year in additional expenditures for two positions to license marijuana facilities that test marijuana products. This estimate assumes 20 such facilities. New revenues are expected to be sufficient to offset these costs.
The Oregon Department of Agriculture estimates $100,000 per year in additional expenditures for one position to provide rulemaking related to marijuana-infused food products, engage in outreach to the food industry, and assist members of the food industry to achieve compliance with rules. New revenues are expected to be sufficient to offset these costs.
Oregon State Police estimates that passage of the initiative would create a need for three additional Highway Interdiction Team detectives as well as training of all sworn members in Advanced Roadside Impairment Driving Enforcement and training of some members to join the existing pool of Drug Recognition Experts. The associated start-up costs for additional staffing and training are estimated at $400,000 in state fiscal year 2016 and ongoing expenses of $400,000 per year beginning in fiscal year 2016. New revenues are expected to be sufficient to offset these costs.
The Oregon Judicial Department expects additional court costs to address OLCC rulemaking and licensing authority of between $21,417 and $55,902 in the 2015-17 biennium and between $13,068 and $47,190 per year in later biennia.
Passage of the initiative may result in the reduction in the number of persons entering the public safety system for marijuana-related violations, thereby reducing state General Fund expenditures on community corrections. Passage of the initiative may result in a reduction in the dollar value of fines collected by state and local governments for convictions of marijuana-related violations. Therefore, the impact for state and local governments, district attorneys, and the courts is indeterminate.
New jobs created will generate an indeterminate amount of income tax revenue.