According to state officials, Wisconsin could generate nearly $170,000,000 in tax revenue annually under a bill to legalize adult-use marijuana introduced by a leading Senate Democrat.
The Department of Revenue, about a month after Senate Minority Leader Melissa Agard’s (D) cannabis bill was introduced, released a fiscal estimation of its economic impact. It included projected revenues from taxes and fees in the first three years of implementation.
The bill has slim chances of passing through the GOP-controlled state legislature, as the Republican leadership is opposed to legalizing adult use. However, an economic analysis confirms what many supporters have been saying for years: that replacing prohibition with regulation will help fill the state coffers.
The Wisconsin bill proposes a retail, general and local state sales tax as well as an excise tax.
Analysts estimate that by the third year after implementation, the state will generate an annual revenue of $60.1 million through the excise taxes, $64.9 millions from the retail tax, and $41.7 from the sales tax. The state would also receive $3.1 million from local sales taxes, as well as $615,000 in fees (if Wisconsin licenses 300 marijuana businesses).
The fiscal note states that there would be administrative costs. The fiscal note says that the state will pay an initial cost of $4 million for the tax provisions in the bill and a recurring annual cost of $4.5 million to cover additional staffing requirements.
The estimate fails to take into account the economic benefits that could be derived from legalization.
Agard said that the revenue projections based on taxes are “nothing but a flimsy stick” in an interview with Marijuana Moment published on Friday. There are also “additional economic benefits” to legalizing marijuana in Wisconsin, such as the creation of jobs in the cannabis industry and the reduction in criminal enforcement costs and incarceration.
She said that if local governments were to save money, either through law enforcement or the courts, they would be able to do so. Due to the laws in Wisconsin, the law enforcement is responsible for enforcing the laws. We need to change this unjust law.
However, the economic impact of legalization has not been the reason for the minority leader to take up this issue. She has emphasized this issue to constituents and businesses in the state during her “Grass Routes Tour” to advocate reform.
It is the right thing. She said, “It is morally the right thing, and it is also the right thing because almost 70 percent of people in Wisconsin, including a majority of Republicans, support this.” But yes, there are also economic benefits to increasing public safety, removing obstacles, ensuring kids are safer, and supporting local governments.
The key provisions of Agard’s marijuana legalization bill :
- Adults over 21 can possess up to 5 ounces of marijuana for personal use and grow up to 12 cannabis plants.
- The bill would impose an excise duty of 15 percent on marijuana producers to cover the wholesale transfer of cannabis and a tax of 10 percent on lounges and retailers for the sale marijuana. Patients who use medical cannabis would not have to pay a tax. The state would allocate 60 percent of its tax revenue to a fund for community reinvestment grants.
- The grants would be used to support initiatives to encourage women and minorities to participate in the industry, healthcare equity, and law enforcement training for impaired driving.
- Licensing cannabis businesses would fall under the state Department of Revenue. The Department of Agriculture would require additional permits for producers and processors. Businesses with more than 20 employees could not be licensed without a labor agreement.
- Wisconsin does not have a medical marijuana program. Therefore, this bill legalizes cannabis for both adult and medical purposes. DOR will need to create a registry of medical marijuana patients who qualify, such as those with a debilitating condition like cancer or AIDS.
- The Department of Justice of the state would be responsible for reviewing all records in order to identify any cases where an individual was convicted of a crime that this bill legalizes. The department would have to start a process for clearing the record of the person if the offense was not violent.
- Employers would be prohibited, with certain exceptions, from discriminating on the basis of the fact that a worker or applicant used marijuana lawfully off the employer’s premises and outside working hours. Cannabis use could not be used to deny unemployment benefits.
A legalization of marijuana would also eliminate the need for Wisconsinites to cross state lines in order to obtain regulated marijuana products. Agard requested a legislative analysis that estimated that Wisconsin citizens spent more than $121,000,000 on cannabis in Illinois alone in the past year, generating $36,000,000 in tax revenue for Illinois.
The Badger State has not yet taken any meaningful action on the issue of legalization. Republican leaders have stated that they are working on limited medical marijuana legislation. However, a bill has not been formally presented this session despite Assembly Speaker Robin Vos’ (R) claim they planned to introduce it “this fall.”
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Mary Felzkowski, a Republican senator in the state of Texas, said that Democrats who advocate for a comprehensive legalization undermine efforts to advance incremental reform. As the minority leader pointed out, Republicans have control over both chambers of Congress and can theoretically push any version of reform they want at any time.
In May, the GOP-controlled state legislature voted to remove cannabis reform language from Governor. Tony Evers (D)’s budget request included measures to legalize, tax and regulate cannabis in the State.
Evers’s office, which submitted the budget request for this fiscal year, estimated that legal cannabis would bring in $44.4 million of “segregated taxes” and an additional $10.2 million to the general fund in fiscal 2025, if the reform were implemented.
The Governor also included legalization of adult-use marijuana and medical cannabis in the budget he proposed for 2021 as well as medical cannabis and decriminalization in the 2019 proposal. However, the conservative legislature has consistently obstructed the reform.
Colorado Governor: The State Should Be at the ‘Center’ of Global Marijuana Market
Photo by Philip Steffan.
State analysts estimate that Wisconsin could see nearly $170 million in annual marijuana revenue under the top Democratic senator’s legalization bill .
