Smoke pours out holes in Cranley’s marijuana plan
John Cranley, a Democratic candidate for governor, announced with a flourish recently that he intends to rebuild Ohio’s roads and broadband with the gusher of tax revenues that surely will arrive if Ohio voters legalize the sale of recreational marijuana this fall.
Ah, the good old days!
I lived through the same fuzzy era of warm promises when Colorado became the first state to open its doors to retail pot in 2014, and I watched as the reality simply did not match the hype. Now back home in Ohio I’m thinking, here we go again.
In Colorado, one of the first people to be disappointed in legalized pot was Colorado’s own governor (and now senator), John Hickenlooper.
He was never a fan but he dutifully implemented the law when the voters passed it on his watch in 2012, and he had two years to prepare the state.
Those tax revenues are “…a drop in the bucket,” he said ruefully after observing the first four years of the Colorado recreational pot era. “It’s not going to pay for early childhood education or solve any big social ill…”
When Hickenlooper made that comment, in 2018, tax revenues from pot were just under one percent of the state’s budget. Today that number is still small — just over one percent.
Politicians often claim that not only will legalized pot kill the black market but, by reaping tax revenue, the public will benefit. Unfortunately, this is a scheme that works against itself and it is not hard to understand why. Because legal pot is highly taxed the black market always undercuts it and this simple fact helps it flourish. In Colorado this has been grotesquely so.
On a bright May morning three years ago residents in suburban homes throughout the Denver metro area awakened to hordes of local police and state and federal agents scurrying through their neighborhoods. It was the largest black-market marijuana bust in the state’s history.
Organized criminal gangs had quietly moved into upscale homes and hid their indoor grow operations. Police seized 80,000 illegal plants and 4,500 pounds of finished marijuana, and they arrested 42 people.
Colorado had become “the epicenter of black-market marijuana in the United States,” intoned a somber U.S. Attorney, Jason Dunn.
And this was five years after legalized pot was supposed to be eradicating the black market for marijuana.
Over the years smaller illegal grow operations in homes around Colorado have bedeviled local prosecutors and police agencies as people persistently try to undercut the high prices of legalized pot and sell directly to the growing customer base.
States that more recently legalized recreational pot, such as New York and California, have come under pressure to lower pot taxes in the face of aggressive and sophisticated black market sellers.
Legalizing pot, it seems, has had an unintended effect of allowing the black market to flourish, not diminish.
And, of course, the black market is only one problem brought on by legalized marijuana. There are high social costs as well, such as ingestion by children, lowered performance in school, lost jobs, evictions, and the need for more addiction rehab.
As these problems began to manifest themselves in Colorado, a Denver think tank, the Centennial Institute, tried to wrap its arms around the real cost of legalizing marijuana in its first few years.
Its study, “Economic and Social Costs of Legalized Marijuana,” was released in 2018, and it concluded that for every dollar of tax income in these first years, the state spent an astonishing $4.51 to rescue people from the ill effects of legalized pot. The researchers acknowledged this was an estimate only, but even if they are off the mark, the toll, when fully counted, will be costly. There is no tax bonanza here. As Cranley announced his grandiose plan for spending pot revenues, he said that “trying to criminalize and outlaw marijuana causes more harm than good.”
Perhaps it does.
Just not for the criminals and the outlaws.
Tom Minnery is a board member of the Center for Christian Virtue in Ohio and formerly senior vice president of public policy at Focus on the Family, headquartered in Colorado Springs, Colo.