The Register Citizen (Torrington, CT)
Connecticut falling behind in race to cash in on pot tax
Proponents of legalizing recreational marijuana estimate Connecticut could make roughly $160 million a year by taxing sales of the drug.
But the state’s potential take has a chance to be much higher — possibly double or more — if Connecticut can outrace some of its neighbors into the marijuana marketplace.
The estimated annual sales tax receipts on marijuana that lawmakers have been citing are based on sales chiefly to Connecticut residents.
In other words, the $160 million annual revenue projection doesn’t assume large numbers of marijuana consumers crossing the borders.
But “if Connecticut were to beat Rhode Island or New York, it could easily have two — or maybe three — times as much revenue from folks in other states,” said Karen O’Keefe, director of state policies for the Marijuana Policy Project. A Washington, D.C.-based research group, the project urges policymakers “to reduce or eliminate penalties for the medical and non-medical use of marijuana.”
The project cites a 2015 analysis prepared by the nonprofit Rand corporation on marijuana legalization and taxation for Vermont.
At that time, projections held that Vermont could generate $20 million to $75 million in annual tax receipts based solely on sales to in-state residents. But the Rand analysis also noted “nearly 40 times as many current marijuana users live within 200 miles of Vermont’s borders as live in Vermont.”
If Vermont could beat border states to the punch by legalizing pot sales for recreational use first, the analysis found, “marijuana tourism and illicit exports could be substantial and could, in theory, put Vermont’s annual tax revenues in the hundreds of millions.” (Marijuana use for recreational purposes has been legal in Vermont since July 1, 2018.)
Connecticut isn’t in quite the same boat as Vermont when it comes to pot and its neighbors, however.
The first recreational marijuana stores in Massachusetts opened last November, completing a decriminalization process that began two years earlier when voters endorsed the switch at the polls.
Consumers age 21 and older can purchase and use marijuana products in Massachusetts. Those under 21 caught using the drug face civil fines and possibly court-mandated drug awareness classes.
New York Gov. Andrew Cuomo not only proposed legalizing marijuana in mid-December, but put it on a fast track, including legalization on his agenda for the first 100 days of the term.
Like in Connecticut, Democrats control the Legislature in New York, and like their Connecticut counterparts they largely have pledged support for legalization.
New Jersey legislators have debated legalization of recreational use in recent years, but neither they nor their New York counterparts have resolved the issue yet.
“There are 20 million-plus people in the New York metropolitan area that are really close to Connecticut,” O’Keefe said, adding that if Connecticut wants a head start on seizing the tri-state market, its window of opportunity is closing.
Leaders of the Democratic majorities in the Connecticut House and Senate have said they anticipate a legalization debate this year.
Senate President Pro Tem Martin M. Looney, D-New Haven, who supports legalization, said Connecticut and many other states have adopted the failed approach the country took in the 1920s during the prohibition of alcohol.
Policymakers knew drinking was harmful “but realized that an absolute ban was futile,” Looney said during a news conference earlier this month. “What we need — as we have done with alcohol, as we have done with tobacco — is a scheme for legalization.”
Gov. Ned Lamont confirmed during a recent television appearance that his budget proposal, due to legislators on Wednesday, would recommend the legalization and taxation of recreational pot use.
Lamont did not disclose how much revenue he anticipates that would raise.
His administration also has emphasized that public safety would be a top priority.
“Let’s be very strict when it comes to legalizing marijuana,” Lamont said during a taped appearance on Capitol Report, WTNH-TV8’s political affairs program, which aired on Sunday.
Lamont said it is important that Connecticut limit the THC content in marijuana products. THC, or tetrahydrocannabinol, is a crystalline compound that is the main active ingredient found in cannabis.
But Senate Minority Leader Len Fasano, R-North Haven, who opposes legalization, said he believes it would cost Connecticut — socially, healthwise and economically.
Connecticut should learn from Colorado, which legalized recreational use of marijuana in 2014, and watched the per-pound price drop in a few years by roughly one-third, he said.
“Revenues are going to be diminished as competition grows,” Fasano said, adding that even if Connecticut enters the legal market before New York, it would — at best — produce a temporary spike that likely would shrink as more neighboring states legalize.
More importantly, he added, “economics should not play a part in this at all. This is a question of moral, social and public health.
“And as competition grows in the marijuana market, and Connecticut’s tax proceeds shrink, we will still have all the adverse social effects of DUIs, of drug addiction, of minors getting involved, and of costs to our social system,” Fasano said.
There are some new factors besides revenue and health care issues that could complicate Connecticut’s marijuana debate in 2019.
Senate Democrats said it is critical that any legalization bill also expunge certain criminal records involving marijuana-related offenses.
Sen. Douglas McCrory, D-Hartford, said he won’t support any bill without a “social justice” component, adding that the criminalization of marijuana has been enforced with racial bias. For example, convictions for recreational use are far more common, he said, among minorities in urban centers than among whites in college and suburban settings.