Sorpasso begins: marijuana is already collecting more taxes than alcohol in the United States

In great surprise in the United States it is not about acronyms, political colors or multinationals, but about drugs. Regulated drugs that can be purchased in licensed businesses, understand. Although the cannabis legalization process is recent and irregular in the country —not yet accepted in all states and at the federal level, it moves in a nebulous state—its footprint continues to grow and in certain areas even dwarfs alcohol. At least that is the reading left by the public coffers.

Data corresponding to the middle of the fiscal year of Massachusetts show that, for the first time, it has collected more in excise taxes on marijuana than on alcohol. And with clear data, in addition: the first added 74.2 million dollars; the seconds, 51.3.

The Cannabis Pull. The data does not reflect so much that the inhabitants of Massachusetts are little given to enjoying a good drink – in 2020 a study determined that 21.2% of their adult neighbors consumed alcohol in excess, a rate that far exceeds the 16.2% national average—as they are increasingly consuming weed. Or at least to take advantage of the opportunity now offered by the authorities to do it legally and paying taxes.

Data from the Cannabis Control Commission (CCC) show that since the green light was given to retail marketing, in November 2018, the amount of sales has not stopped growing and, although with some ups and downs, the curve for the last year reflects a positive drawing. Throughout all of 2021 the state collected alho more than 112 million in special taxes derived from the sale of recreational marijuana, which represents 206% more than initially forecast.

A juicy source of income. If you look back a little further and add up all cumulative retail sales since November 2018, the total amount around 2.54 billion. Today, marijuana for adult consumption is recorded in Massachusetts stores with a state retail price tax of 10.75%, a state sales tax of 6.25%, and an optional local rate of up to 3%. The system is slightly different that applied to alcohol, which in addition to 6.25% is taxed with fixed amounts per quantity.

Regarding the level of consumption, in 2021 the CCC had granted 249 final licenses and recorded the opening of 112 retail businesses. A study conducted with people over 18 years of age at the end of 2017, after the recreational use of marijuana was approved but before the opening of stores, showed that 21.1% of adults in Massachusetts claimed to have used cannabis in the last 30 days, the vast majority (56%) without medical justification. In another study, somewhat more recent, published in 2020 with 403 respondents – the majority from Massachusetts itself – concluded that 37.5% claimed to use the drug daily.

And employment, too.. In addition to tax revenue, marijuana is proving to be an interesting source of employment. A report released in 2019 by Leafly and Whitney Economics concluded that the cannabis industry was one of the fastest growing in terms of employment in the country. Specifically, at that time it registered an increase of 44% to add 211,000 workers.

These are not spectacular figures for a nation of more than 329 million inhabitants, but they stand out for their trend and the potential they draw. Given the characteristics of cultivation, processing and distribution, the sector needs labor. The report also points out the prospects for the future, especially taking into account the legalization drive in the US. Its authors estimated that its economic impact could be around $75 billion by 2030.

Objective: regulate and take advantage of the community. “A well-regulated cannabis industry will contribute to the State, cities and towns, and citizens through economic development, job growth, tax revenue, and safe access to marijuana for adults and medical use,” claims the CCC itself, which emphasizes that accredited establishments offer “tested products with detailed packaging and labeling information on the content.”

The objective: to offer an “alternative to the illicit market” to all those adults and patients who want to get hold of marijuana. That, of course, and achieving a powerful contribution to the public coffers that, among other things —recalls CCC— is used for “prevention campaigns” for young people.

Not everything is positive data, of course. The United States Center for Disease Control and Prevention (CDC), which notes that 18% of Americans used marijuana at least once throughout 2019, it continues to warn of its risks: three out of ten people who consume it have disorders and the risk is especially serious among the population under 18 years of age. Own New York Times picked up in a report made in 2019 in Colorado how after the activation of the recreational sale there, in 2014, the number of patients who ended up in the ER linked to consumption had risen and the hospitals computed more cases of mental health.

Of course, minor crimes related to marijuana had decreased. In Denver, for example, the percentage of youth arrested for that reason had fallen by 20%.

The complex relationship with public administrations. All these data, of course, must be seen in light of the complex relationship between administrations and marijuana. After Colorado’s Pioneer Pass at the beginning of 2014, several US states have decided to regulate its recreational marketing, which does not mean that it continues to move in a complex legal nebula at the federal level. The best strategy to address consumption is also unclear.

Despite the voices that warned that legalization would facilitate access to the drug and, therefore, encourage its use, the truth is that Colorado has seen how its incidence has fallen among teenagers. If in 2013 12% of young people bought and consumed grass, the percentage had dropped in 2018 —four after the regulatory change— several percentage points, to 9%.

In a 2019 survey in Colorado by the New York Times several heads of educational centers documented an increasing consumption of marijuana and a decrease in alcohol consumption. In fact, surveys show that most teens have tried the substance. Interestingly, consumption in that age group has decreased significantly since its medicinal sale is allowed and in 2019, 80% claimed not to be taking it.

Beyond Massachusetts. What remember fortuneMassachusetts was far from the only state to see its revenues grow throughout 2021. Others that have legalized marijuana, allow its medical use or have decriminalized it, have also achieved a good tax balance in 2021. In Illinois, for example, taxes on marijuana for adults surpassed those on alcohol for the first time: specifically, they added an additional $100 million.

Según Marijuana Policy ProjectSince licensed sales began in 2014, states that opted for legalization have collected more than $10 billion in cannabis taxes.

A candy for the industry. Not only the administrations have looked at the market, of course. A New Frontier Data study ensures that legalization at the national level in the US would mean around 130,000 million in tax revenue and around 1.6 million new jobs, significant figures that have already captured the attention of investors. If legalized, they could even take over the market share in the hands of drug traffickers.

as detailed The Economist, in Mexico, which approved in 2021 recreational use, it is estimated that 30% of drug cartel income comes precisely from marijuana trafficking. On the horizon is the example of Canada, where weed has been legalized since October 2018: in 2020 he left 1,760 million euros in legal sales, 120% more than the previous year, a rise in consumption that could be encouraged in part by the anxiety generated by the pandemic.

Pictures | Matt Moloney (Unsplash) Y Elsa Olofsson (Flickr)