According to Moody’s Investor Service, taxing legalized marijuana is just a little boost to state and local government revenue. This comes despite high taxes on the sale of legal weed. In the first state to legalize the recreational use of marijuana, Colorado, tax on weed captures about 2 percent of the state budget. In Washington state, however, gross revenue from legal marijuana sales brought in 1.2 percent of the revenue to the general fund for the 2015-17 state budget.

In state that have legalized marijuana, most of them designate the marijuana tax revenue for law enforcement, drug treatment, and related government programs that do not benefit the rest of the states’ budget.

The Moody’s report noted that the effect on revenue for local government jurisdictions is minimal in states with legalized cannabis. "For US states and local governments that allow retail sales of marijuana, the related tax revenue is marginally credit positive," said Moody VP Senior Analyst Grayson Nichols, according to a release. "Even for states with mature industries, such as Colorado, and large states like California, expected revenue will remain only a small share of annual general fund revenue, given the limited opportunities for significant market expansion."

New Jersey Gov. Phil Murphy (D) is hoping to see an additional $60 million in taxes from legalized marijuana in the next fiscal year. Currently, that means less than 1 percent of the the Garden State’s annual budget. Twenty-nine states now allow marijuana for either medicinal or recreational uses. In the U.S., illegal sale of marijuana is estimated to be $40 billion.



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Martin Barillas is a former US diplomat and the editor of Spero News.

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