Federal and state governments are faced with discouraging fiscal expectations of the future. The nation faces a debt of 60% of GDP, which is her highest level ever since the World War II. With the present projections, this estimate will increase to over 75% of GDP by 2020 and will also be on the increase thereafter. The United States are equally facing serious budget deficits.
The public and politicians show concern about this debt, but the increase in tax or the standard proposal for cuts in expenditure has rendered a little support. Therefore, commentators, citizens, interest groups, and some politicians have accepted the legalization of marijuana to close the fiscal gaps.
Furthermore, lawmakers in Washington find it difficult to balance the nation’s budget which shows that an important source of revenue might be wasting away. According to researches from the Cato Institute, the federal legalization of marijuana is a source of new large revenue stream.
“We don’t know the size of the marijuana market right now, and we certainly don’t know what would happen to the price and the demand for marijuana under different levels of legalization,” said the senior analyst at the ITEP (Institute on Taxation and Economic Policy). But we do know that legalization would lead to a positive revenue impact on the income and sales tax side.”
In regards to the 2010 research from Cato, the legalization of marijuana would generate an annual income of $8.7 billion in federal and state tax revenue. The researchers presumed that when marijuana are being legalized, it would be taxed like tobacco and alcohol and the income generated by pot producers would be subjected to standard income and sales tax. However, taxes are not the only stream of revenue that would be attached to the legalization of marijuana, according to the research. Local and state governments will also save the billions of dollars which are currently being spent on regulating the use of marijuana.
Colorado and Washington, these two states have already legalized marijuana usage for recreational purposes, will be the litmus tests to calculate the fiscal impact of weed legalization on the national level. It was estimated by state of Washington that the legalization of marijuana will generate at least $1.9 billion as an additional revenue in 5 years.
Currently, Washington D.C. and 18 other states have already legalized the use of medical marijuana, says the NCIA (National Cannabis Industry Association).
According Pew Research Center Poll, a large number of Americans also support the legalization of marijuana.
However, the people against the legalization of marijuana argue that the fiscal advantages from legalization are overshadowed by the impact socially. The legalization of marijuana will contribute more to crime, social disintegration, and violence of the country.