The Wisconsin legislature introduced a bipartisan bill Oct. 18 proposing the legalization of medical marijuana, but the economic effects may not be as large as hoped, according to the Wisconsin Policy Forum.
Wisconsin is one of the few states in the area without its own concrete marijuana legislation outside of federal bounds, and three out of its four surrounding states have either legalized marijuana for medical use or for full use, according to The Cap Times.
In a statement to Milwaukee Public Media, Rep. Melissa Sargent, D-Madison said, “Many of the Midwestern states surrounding us are either medicinal or full legalization … it’s going to have a negative impact on the state of Wisconsin.”
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Proponents of the bill, including Sargent, see this as a disadvantage for Wisconsin’s state revenues, as nearby legalization could cause residents to go elsewhere for their marijuana use in medical or recreational format, according to WUWM 89.7.
Wisconsin Sen. Lena Taylor, D-Milwaukee said the recreational use of marijuana is not likely to pass in the Republican majority legislature.
“Until there is a shift in the number of Democrats in the legislature, recreational marijuana faces an uphill fight,” Taylor said.
Taylor said since it is more likely for a bill legalizing medical marijuana to pass over recreational use, it would be difficult for the state to expect to bring in revenues from this.
With medical marijuana legalization being the most likely route, the state would directly receive little to no tax revenues under Sargent’s plan.
“Under my legislation to legalize cannabis in Wisconsin, medical marijuana would not be taxed,” Sargent said. “Therefore, the expected tax revenue associated with medicinal marijuana would be minimal.”
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The Wisconsin Forum Policy report shows other states’ lawmaking processes. The report shows with the passing of a medical marijuana bill, a bill legalizing recreational use often soon follows. That second bill is where marijuana could bring in more money for the state.
The report found 17 states out of the 33 that legalized medical marijuana did so through a ballot initiative, and nine of these states legalized recreational marijuana soon after.
Although the report provides limited projections, there is not much data to predict revenues Wisconsin might see from the possible future legalization of recreational use.
As of right now, Wisconsin is looking towards states that have already fully legalized marijuana to use as examples, according to WUWM 89.7. This includes how the legalization may have shifted each state’s economic terrain.
Craig Levin, COO of Avitas Cannabis in Washington, said there were about 2,000 licensees to sell marijuana in Washington when legislation legalizing recreational marijuana passed.
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“The cannabis industry in the United States has created around 220,000 [jobs] around the U.S.,” Levin said. “Not saying that everyone was unemployed before, but it gave people more opportunity.”
Milwaukee Public Media estimated that last year California brought in $345 million from recreational marijuana. Colorado saw state revenues of $266 million and Nevada collected $70 million.
In an interview with WISN-TV, Senate Majority Leader Scott Fitzgerald said he thinks “we’re seeing states like Michigan and Minnesota that now have embraced the whole idea of even recreational [marijuana]. I think it would be wise for Wisconsin to kind of sit back and see what happens in these states.”
However, the projections are often off, as the medical and recreational use of marijuana fluctuates with trends and other factors. Milwaukee Public Media notes that Nevada’s revenues were 40% higher than projected their first year while California’s revenues were 45% lower than expected.
Politicians are quick to note that projected figures for state revenues from marijuana across the board are much smaller compared to other substantial taxes, and even the tax on cigarettes.
“For perspective, revenue collected from cigarette taxes in Wisconsin in fiscal year 2019 totaled $514.3 million,” according to the Wisconsin Policy Forum.
This number surpasses even California’s total revenues from recreational marijuana. As Wisconsin projects much lower revenues from recreational marijuana than California, returns on marijuana would carry even less weight in comparison to other substantial revenue forms for the state.
“To unleash the true economic potential of cannabis, our state must pave the way for full legalization,” Sargent said.