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Marijuana Industry Could Bring in $28 Billion a Year: Study

The legalization of marijuana has benefited people struggling with illnesses, not to mention the government. The marijuana industry may ultimately generate up to $28 billion in tax revenue for the federal, state and local governments, a study from the Tax Foundation reveals.

marijuana-industryThe states that have legalized marijuana are already reaping some tax benefits. Alaska, Colorado, Oregon, and Washington have legalized the use of both recreational and medicinal marijuana. Bankrate shares the report findings:

“Around $7 billion of the marijuana tax money, according to the Washington-D.C. think tank, would go to the federal government, with $5.5 billion from business taxes and $1.5 billion from income and payroll taxes.

“On the state level, say Tax Foundation researchers, if all states legalized and taxed marijuana, the combined 50 jurisdictions could collectively bring in as much as $18 billion annually.

“Uncle Sam’s relatively small cut

“Before you head to Washington, D.C., or your state capital to lobby for legal weed — on purely financial grounds, I’m sure — take a breath. In the grand scheme of tax money needed to keep Uncle Sam’s and state operations running, the potential marijuana taxes are not that much.

“The federal budget in fiscal year 2015 was $3.8 trillion. Trillion with a T.

“The estimated $7 billion in federal tax money from marijuana would cover only 0.20% of Uncle Sam’s expenses. Yep, well less than 1%.

“State, local weed taxes not much either

“Still, any added income is welcome, right? Especially at other governmental levels.

“Sorry, but the percentages aren’t that exciting for the states, counties and cities, either.

“If all states legalized and taxed marijuana, The Tax Foundation projects that states could collectively expect to raise between $5 billion and $18 billion per year.

“Meanwhile, combined state and local spending for 2016 is estimated to be around $3.4 trillion. Yeah, that T word again.

“Even when using the high estimate of $18 billion in marijuana taxes, that covers just 0.53% of the state and local estimated expenditures.

“Other pot tax considerations

“The Tax Foundation acknowledges that the raw numbers themselves are not great.

“‘While these amounts are not stratospheric, they are considerable and exceed additional enforcement and regulatory costs incurred by the states,’ says the nonprofit in a statement that accompanied its marijuana tax study.

“Plus, as the marijuana industry became legal nationwide, there would be increased payroll and income taxes from those employed in the new businesses.

“Of course, that would likely lead to increased marijuana production, meaning the price of weed would fall as more entered the market. That in turn would lower the tax take.”