The $75 Million Reason Vermont Should Legalize Marijuana

Source: AP
Source: AP

If Vermont legalizes marijuana, the Green Mountain State could see a major influx of green.

Should Vermont decide to legalize marijuana, revenue from marijuana consumers could generate between $20 million and $75 million a year for the state, according to a new report from the RAND Corporation, produced at the behest of Vermont Governor Peter Shumlin. 

The 218-page report, commissioned as a result of a May 2014 law directing Vermont's Secretary of Administration to analyze consequences of legalizing marijuana, explores every aspect, option and pathway to legalization in the Green Mountain State. "The RAND report provides the most detailed accounting available about the wide number of issues that face state officials — in Vermont and elsewhere — when considering alternatives to traditional marijuana prohibition," according to a RAND press release.

If the report resonates widely among state officials, Vermont could join Colorado, Washington, Alaska and Oregon as the next U.S. state to fully legalize marijuana consumption for recreational and medicinal purposes.

Source: Don Ryan/AP

The report: The RAND report suggests that if Vermont legalized marijuana and taxed the product aggressively, tax revenues from sales to Vermont residents "could be in the tens of millions of dollars annually." The demand is certainly there: The report estimates that during 2014, Vermont residents likely consumed between 15 metric tons and 25 metric tons of marijuana and spent between $125 million and $225 million on the drug.

This fits with the legalization experiences of other states. Colorado brought in $36.5 million in tax revenue through the first 11 months of 2014, all thanks to medical and recreational marijuana, while four months after the sale of recreational marijuana began in Washington state, legal sales are projected to bring in about $60 million more in revenue over the next five years than originally thought.

But that $75 million figure mentioned in the RAND report is dependent not on Vermont marijuana enthusiasts, but outside consumption by neighboring states as well. The report estimates that are nearly 40 times as many regular marijuana users living within 200 miles outside of Vermont's borders as there are living inside Vermont. This means that the state could end up supplying large numbers of out-of-state users, directly or indirectly, a fact that would "vastly increase the potential revenue to the state" through marijuana tourism.

Despite this optimistic forecast for marijuana legalization in Vermont, the report does not make a recommendation about whether the state should change its marijuana laws; RAND researchers said the goal of the report is "to inform, not sway, discussions about the future of marijuana policy in Vermont and other jurisdictions considering alternatives to traditional marijuana prohibition."

To that end, the report breaks out 12 ways a state can regulate the supply of marijuana, including maintaining prohibition but reducing penalties, full commercialization currently tested in Colorado and Washington, maintaining prohibition and increasing penalties, and repealing prohibition without passing any kind of regulation of the marijuana industry. Each of the 12 paths offers different benefits and risks to public health, government control of the industry, the ability to generate revenue and the level of conflict with federal law.

Now what? No proposals to legalize marijuana have been introduced in the Vermont legislature just yet. But thanks to the RAND report, such initiatives could pick up steam in the coming months.

"Our conversation about whether to legalize marijuana must be rooted in facts and be transparent about the uncertainties. This RAND report will serve as a critical foundation for our ongoing discussion about the best course for Vermont," said Gov. Shumlin. "I continue to support moves to legalize marijuana in Vermont, but have always said that we have to proceed with rigorous research and preparation before deciding whether to act. This report will help us do that."

h/t Washington Post

Editor's Note: Feb. 25, 2015

An earlier version of this article cited RAND information, but did not include quotations around the cited passage. The story has been updated to fully attribute the RAND language.

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Jared Keller

Jared Keller is the former director of news at Mic.

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