Health & Medicine Legalization News U.S.

Coronavirus Could Accelerate US Cannabis Legalization

11 states and Washington, D.C. currently allow legal recreational cannabis. (Yahoo Finance)

 

As the economic damage from the coronavirus pandemic piles up, U.S. cities and states are set to face significant lost revenue given the loss of business activity.

But, as DataTrek Research’s Jessica Rabe writes in a note, “there’s a simple and effective solution for states and cities to help cover their huge budget shortfalls after the COVID-19 pandemic subsides: legalize recreational sales of marijuana.”

New York, the epicenter of COVID-19 cases in the U.S., might see a revenue drop of $4 billion to $7 billion compared to what it was expecting, according to the state comptroller. With a budget of $87.9 billion, that’s significant.

“We’ve been thinking a lot about how life will change post-virus, and one big difference will be that state and local governments are going to encounter large unexpected tax receipt shortages,” Rabe wrote. “That’s particularly true when it comes to sales and income taxes amid stressed consumer balance sheets and massive layoffs. And unlike the Federal government, states can’t print unlimited amounts of money.”

Legalization of cannabis for adults, Rabe points out, could be a really easy way to shore up tax basis without driving people out of state, as raising income tax might do. Already it has been successful at raising “hundreds of millions of dollars annually in states like Colorado,” she said. There are currently 11 states with legalized recreational cannabis and another 15 that have decriminalized the drug in one way or another.

A key push toward legalization

Though New York Gov. Andrew Cuomo hasn’t been successful in efforts to push legislation for legalization, conservative estimates have shown it can bring up to $1.3 billion in revenue per year.

“If Colorado can raise +$300 million from recreational and medical marijuana sales in a year, New York can certainly earn over $1 billion as long as the state taxes and regulates adult-use sales reasonably,” said Rabe, who noted that Colorado’s approach has yielded better results than California, which has missed revenue projections.

To Read The Rest Of This Article By Ethan Wolf-Mann on Yahoo Finance News

Published: March 26, 2020

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