Marijuana Revenue Still Missing While Budget Challenges Persist

by Michael Bielawski

Earlier this month the state finance department dipped its hands into the medical marijuana reserves and pulled out $300,000 from a $500,000 balance to mitigate the pains of a $30 million general fund deficit.

Lt. Gov. David Zuckerman was not impressed. “When you take those fees from people who are sick and have paid to have a license to be able to get medicine that still costs them significantly more because insurance doesn’t cover it, it’s already expensive and hard for folks to pay for.”

Such a move has some wondering why there continues to be no concrete plan in place for a tax-and-regulate market for legal recreational marijuana, which is set to go into effect this July. Zuckerman said studies suggest Vermont’s marijuana market is estimated somewhere in the realm of $100 million to $200 million.

Rep. Sam Young, D-Glover, is sponsoring a bill that would do just that, in addition to setting up licensing requirements and education. Young said the odds of anything getting done this legislative session are not great, but he shared what his bill is trying to accomplish.

“One was trying to create a market for small growers, so that you could have kind of a craft marijuana industry in Vermont similar to what we have for craft brewers,” he said. “And it would help to bring people who are growing small amounts right now into the legal marketplace.”

He added that some of the thinking now is to wait for the governor’s Marijuana Advisory Commission to run its course.

“My preference would have been that the state would have been getting tax revenue from legalization, but it turned out that it really needed to be a two-step process. The Senate has voted multiple times to move toward tax-and-regulate. With the House, it’s been more difficult.”

Meanwhile, Zuckerman suggested that Vermont is missing out. He reiterated that when it comes to meeting the original goals for safety and education, commercializing marijuana is the best strategy.

“I think a tax-and-regulate model actually meets the governor’s goals better than the law that he signed,” Zuckerman said. “And again, I question if someone is really talking about highway safety. We support our microbrew industry, why are we not taking the alcohol revenue and putting that toward highway safety?”

“If one is saying that’s the message around cannabis, there is actually less evidence toward the danger of driving,” he added.

Some of the data cited in the governor’s Marijuana Advisory Commission last fall reassert that notion. A study cited by the Norwegian Center for Transport Research and the Ragnar Frisch Center for Economic Research concludes that cannabis intoxication while driving compares, on average, to driving with a blood-alcohol content of .04 to .05 percent. The legal limit for alcohol in Vermont is .08.

And regarding revenues, Zuckerman said with a tax-and-regulate model, the state could see a boost in new payroll tax income as people declare income associated with a developing marijuana market, such as tourism.

“You would have extra general fund revenues through the normal system of an expanding economy through tax-and-regulate,” he said, “as well as the tax specifically on the cannabis, which is well in excess of the $300,000 hole he filled raiding the medical marijuana fee structure.”

One of the areas in the state budget significantly lacking this year was education, with estimates that the state’s education fund could be as much as $80 million short. Zuckerman noted using the money for something like this is an option, but there should be cautions.

“Well, certainly there are those who say we should do tax-and-regulate and put the money to property tax relief,” he said. “The only danger there is that there may be a bubble in revenue from cannabis reform, and for every state that passes it, that bubble may shrink.”

On the current legalization status set to take place this July, Zuckerman said the changes are measurable but not substantial enough.

“The new legislation doesn’t really greatly affect the underground market in particular,” Zuckerman said. “It does allow some people to grow their own or those who have been growing their own to continue and not feel like they are criminals anymore. But it does not really achieve all the goals I have for adjusting to a full tax-and-regulate system with respect to really competing and removing a lot of the underground market.”

On the House floor when representatives finally passed legalization on to the governor, House Minority Leader Don Turner, R-Milton, proposed adding language to transform the bill into a full tax-and-regulate proposal. Zuckerman sees some potential support here.

“I’ve asked a number of representatives who’ve voted yes on that, and I plan to speak with more of them and say, ‘Were you voting for that to create a poison pill on the bill or were you voting for it because if there was truly going to be a change in our laws, you’d rather go all the way with tax-and-regulate so you would have the money for prevention, treatment, and law enforcement?’” Zuckerman said. He said the answer from many of them has been a combination of the two.

Regarding any legislative action for this year, Zuckerman said if the citizens of Vermont want it and are willing to call for it, anything can happen. “When the public engages in democracy, really any time, it could be on the table if it’s the public sentiment.”

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