With New York State scraping to cover a seemingly ever-widening budget gap, state leaders have been exploring all sorts of options for new revenue. But here's one that, as far as we know, hasn't come up, yet: taxing marijuana.
Ha! That's a joke, right? Well, in California -- which is facing a $42 billion budget gap -- a state assemblyman has proposed doing just that. And by some estimates, the Golden State could bring in more than a billion dollars that way.
OK. If New York started taxing pot, how much could it bring in?
Let's start with the size of the overall pie (or, uh, brownie).
So now we have to figure out size of New York's slice. Let's just go the quick and easy way by dividing the value of the crop by the number of people in the US for a per capita figure.
$35.8 billion of marijuana / 298 million people in 2006 = $120.13 per capita
Let's assume that New York consumes marijuana at that average. New York has roughly 19.5 million people. At $120.13/person, that's $2.34 billion a year in annual pot sales in the Empire State.
Here's where things get really tricky (sticky?) -- how do we figure the state's take of those sales? There's sales tax to consider, of course, but also excise taxes and income taxes from the all new businesses that will now be above board. Hmm. Let's punt. In that Time article first referenced above, there's an estimate that California could get $1.3 billion on $14 billion in marijuana sales. So let's just go with a rate of 10 percent.
$2.34 billion x .1 = $234 million in state revenue
The total state budget is somewhere around $122 billion, so that $234 million isn't going cover that much. But it's something. For example, the recent state worker layoffs were projected to save the state almost $500 million over two years. Yep, you could cover the cost of those state jobs by taxing marijuana.
Caveats and all that
This is some seriously fuzzy (hazy?) math. It's estimates based on estimates based on assumptions about an underground market. You gotta figure that the price of marijuana will go down a bit if it's legalized. And we haven't figured in any of the potential societal cost that could come with legalization. That said, the state could probably save some money by no longer having to prosecute these transactions, either.
By the way: Barack Obama doesn't think this is the sort of economic stimulus we need right now.
photo: Flickr user chatirygirl
The Bottom Line
According to a bunch of fuzzy math, New York State could bring in roughly $230 million by taxing marijuana.
We'd really like you to take part in the conversation here at All Over Albany. But we do have a few rules here. Don't worry, they're easy. The first: be kind. The second: treat everyone else with the same respect you'd like to see in return. Cool? Great, post away. Comments are moderated so it might take a little while for your comment to show up. Thanks for being patient.