Blowing smoke into the budget gap

brownie on plate

A new source of revenue for the state?

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).

From a 2006 analysis by a marijuana reform advocate, the annual US marijuana crop is worth $35.8 billion. (If that's accurate, pot is the #1 cash crop in the US.)

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.

Comments

Not to mention better and safer pot.

Proposal: Combine decriminalization with the, "fat," tax. New York could be rolling in munchies money.

I'd be all for it, except I'm deathly allergic to the stuff. Found out from 2nd hand. Never even had the chance to smoke it. So, legalizing it would be a real bummer for me. Kinda like passing the cheap can of tuna in the supermarket and remembering that you love tuna, but are allergic to it so can't partake in it's cheap yumminess. Oh, and I'm allergic to tuna too. *shrug*


I'm suddenly hungry and I'm not sure why...

woah mannnnn those maths are bugging me outtttttttttttttttttttttt

Say Something!

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.

The Scoop

Ever wish you had a smart, savvy friend with the inside line on what's happening around the Capital Region? You know, the kind of stuff that makes your life just a little bit better? Yeah, we do, too. That's why we created All Over Albany. Find out more.

Recently on All Over Albany

A quick recap of the week

+ Alyssa asked about opportunities for becoming more politically and socially active in the community. + We took a peek at RAD Soap Co.'s new... (more)

The office building and the air conditioner

Random Friday afternoon thing: While walking Otto at the Harriman State Office Campus, we've noticed that there's a tiny, single air conditioner that hangs from... (more)

The Empire State Plaza skating rink is open for the season

The ice skating rink at the Empire State Plaza opened for the season Friday. When we stopped by this afternoon there were a bunch of... (more)

Dead & Company returning to SPAC

The first announcement for a 2017 SPAC pop show is out: Dead & Company is set to return to SPAC June 20. Tickets go on... (more)

Stuff to do this weekend

Yep, it's the holiday season. If you can find time between the shopping and the baking and the decorating, there's plenty of stuff to do.... (more)

Recent Comments

I know some people get excited when they hear that some chain from outside the area is coming to the Capital Region, but I'm not one of them. Local businesses mean local dollars; the money stays here rather than going to a corporate headquarters far, far away. If Price Chopper is sold to an outside company - especially a company that answers to its stockholders more than its customers - that could have a huge impact.

Alicia's charming Schenectady home

...has 7 comments, most recently from Marcia

The potential sale of Price Chopper would be a big deal (and not just because of the price)

...has 19 comments, most recently from David Bauer

Paging through The Alt

...has 12 comments, most recently from LC

Day trip: New Paltz

...has 3 comments, most recently from Suburban slumming

The Empire State Plaza skating rink is open for the season

...has 1 comment, most recently from Jamie