Recreational Weed Revenue Could Top $50 Million
If Montana voters approve the ballot initiatives legalizing recreational marijuana this November, it could raise between $43.4 and $52 million dollars in tax revenue for the state, according to a new report by the Bureau of Business and Economic Research. The report, authored by BBER director Patrick Barkey and associate director Robert Sonora, found that legalized recreational marijuana could bring in over $236 million in tax revenue in the five years between 2022 and 2026.
The total market sales for retail marijuana, if legalized, could be as much as $217 million in 2022 and increase to $260 million in 2026. Those figures follow trends set by other states that have legalized marijuana.
The report was commissioned by New Approach Montana, the group behind CI118 and I-190, the initiatives to legalize, tax and regulate recreational marijuana in Montana.
The report, the authors said, exists to answer the financial “what if” questions that arise from the potential implementation.
“Our independent research utilized the extensive surveybased data that is publicly available, detailing the frequency of cannabis use of both Montana residents and visitors to give us a good understanding of potential tax revenue on legalized retail cannabis sales,” Barkey said.
The two initiatives would set the minimum age for buying marijuana at 21 and would set the tax rate for marijuana purchases at 20 percent. That 20 percent tax is what could bring in millions of dollars in tax revenue, potentially even more than the tax on alcohol.
BBER assessed the way the recreational marijuana markets began and evolved in states that have legalized to inform the report. It also used information from the National Survey on Drug Use and Health to predict how many people, both residents and tourists, would be potential customers of recreational marijuana.
According to the NSDUH, adults in Montana use marijuana recreationally at slightly higher rates than adults nationwide. In its 2017-2018 survey, 14.3 percent of Montanans over 21 said they used marijuana in the past 30 days. That’s higher than the national rate of 9.8 percent.
Those figures don’t differentiate between medical marijuana, which is legal, and recreational marijuana, which is not currently legal. Medical marijuana has a 4 percent tax, which is expected to drop to 2 percent in 2021.
The report found that more than 15 percent of adult tourists are likely to visit dispensaries when visiting states with legal recreational cannabis sales. The legalization of recreational marijuana in Montana could also support other adjacent industries, as it has in states like Colorado.
