Legalizing and taxing marijuana boosts state and local revenues (photo: Kaledj777 / wikimedia)

If voters this year in Colorado decide to approve Amendment 64, which would legalize and regulate marijuana like alcohol, it would noticeably improve the financial situation of both the state and local governments. A new study by the Colorado Center for Law and Policy found that the marijuana legalization initiative could generate roughly $60 million in new revenue and savings a year.

The bulk of the new money for the state and local government would come from new taxes collected on the legal sale of marijuana. According to the report, taxes on marijuana sales could generate roughly $47.3 million in new revenue. Of that, about $33.8 million would go to the state while local government would collect around $14.5 million in local sale taxes. In addition to the tax revenue, the state should realize roughly $12 million in law enforcement saves as a result of marijuana no longer being illegal.

The report also concluded that the amount Amendment 64 would generate/save the state would likely grow significantly going forward. In the years after 2017, depending on a variety of factors such as what the legislature chose to put the excise tax at, marijuana legalization could generate between $100-136 million a year.

Like any projections about the future, this one is subject to many important unknowns; for example, marijuana how will be purchased, and importantly, how much the federal government will interfere. If the federal government aggressively goes against the will of the electorate that would obvious hamper tax collection. There is little doubt, though, that if a relatively popular product such as marijuana is legalized and taxed, it would generate substantial revenue.