Washington State Overestimating Marijuana Tax Revenue, Adviser Says

Washington state is overestimating the amount of tax revenue that will be generated by marijuana sales, according to a consultant hired by the state to set up and regulate its new marijuana market.

Dr. Mark Kleiman says potential tax revenue is likely to be less than half of the $450 million the state estimates as a maximum return, The Seattle Times reports.

Kleiman notes just 20 percent of users consume 80 percent of all marijuana in the United States. “The only way to get a lot of revenue is to sell a lot of marijuana,” he said. “The only way to sell a lot of marijuana is to sell to people who smoke a lot of marijuana. And that’s not a good thing.”

Setting marijuana prices will be tricky, Kleiman said. If the state sets higher prices, the result will be less use, less revenue, and a stronger black market. Lower prices could hinder the black market, but increase underage marijuana users, as well as adult abuse and illegal exports, he said.

Kleiman is Chief Executive of Botec Analysis Corp., a think tank that specializes in crime and drug policy. Kleiman will head a 30-member team advising the state. The state’s Liquor Control Board announced in March the company was chosen over 112 other applicants. The board has until December to set up a system that will allow marijuana to be sold and taxed at state-licensed stores.

Washington state, along with Colorado, approved recreational use of marijuana for adults 21 and over this past November.

It remains a crime to sell, cultivate or share marijuana in Washington state. It is also illegal to drive under the influence of the drug, or use it in places where alcohol is illegal. Marijuana use is illegal under federal law.