Medical marijuana may bring economic boost
BOSTON — The term “green economy” could take on a new meaning with the Massachusetts medical marijuana law. State coffers may be enriched by administrative fees, and new business opportunities could mean more jobs and tax income.
And that may only be the start. The numbers could get much larger if Massachusetts follows a future path to legalizing pot for recreational use.
“Certainly, some people will get jobs and there will be some revenue from the sale of marijuana,” said Harvard University economist Jeffrey Miron, a longtime advocate for the legalization of marijuana. “Exactly how that works out, whether it’s a lot or a little, depends exactly on how it’s implemented.” Legalizing medical marijuana has been a boon to some states’ economies, bringing in an estimated $40 million in tax revenue per year to Arizona; there are various estimates for what California nets from its law, with some ranging as high as $100 million a year.
However, substantial changes would have to be made to the law were Massachusetts to see revenue anywhere near those levels.
The Massachusetts law allows up to 35 nonprofit marijuana dispensaries across the state, a more modest number than several other states. The dispensaries’ nonprofit status in Massachusetts would make their revenue tax-free. The state law exempting prescription drugs from the sales tax would also eliminate revenue for the state. Tax revenue would be limited to the income tax from dispensary employees, unless laws were changed.
“I don’t want to say there are no economic impacts, but those are pretty modest,” Miron said.
Additional revenues could be realized by charging dispensaries and patients licensing fees for selling and purchasing marijuana, a common practice in the 16 other states with medical marijuana laws.
Registration fees for dispensaries vary from state to state, with a low of $5,000 in Arizona to a high of $20,000 in Vermont. Many states also charge dispensaries yearly renewal fees equal to or higher than the original fee. No states provide current figures on the total take.
Many states require patients to apply for medical marijuana cards, charging fees ranging from $25 in Alaska and Hawaii to $200 in Oregon.
Some states, such as Oregon and Nevada, are able to fund their medical marijuana programs entirely through the application fees, thus making the programs budget-neutral.
It will be up to the Department of Public Health to decide if any fees will be charged in Massachusetts.
Whatever the figure, it would likely pale when compared to revenues that would come from legalized recreational pot.
In Colorado and Washington, where recreational marijuana just became legal, the projections for marijuana revenue are eye-catching.
The Colorado Center on Law and Policy estimates about $60 million in revenues and savings (from reduced law enforcement costs) for the state by 2017. In Washington, the state Office of Financial Management is projecting $1.9 billion in revenue from recreational marijuana over the next five years.
For now though, any impact that the new medical marijuana law is going to have on Massachusetts will largely be on the legal availability of pot rather than how big of a cut the state will take.
“These are all just changes in exactly where people are getting the marijuana,” Miron said. “They’re not fundamental changes in the size of the industry or the nature of the industry.”
Edward Donga and Lexi Salazar report for the Boston University Statehouse Program.