Ten US states, plus Washington, DC, have now legalized recreational marijuana, and initiatives are under consideration in several others. As more places move toward making cannabis a government-regulated industry, one big question has surfaced: Where will the tax revenue from legal weed go? One possible answer: toward transportation.
A new report by NYU professor Mitchell L. Moss suggests that New York legalize weed for this exact reason — Moss says profits from cannabis sales could be used to fix New York City’s public transit system, something subway officials say will cost $40 billion.
The report states that legal cannabis sales in North America reached $9.2 billion in 2017, and are projected to generate $47.3 billion over the next decade. Colorado, which legalized weed in 2012, has earned $862 million in total revenue since 2014, and Washington, which also legalized in 2012, has earned $686 million in excise tax revenue.
According to the New York State Health Department, the illegal marijuana market in the state is valued at between $1.7 billion and $3.5 billion per year, and legalizing weed has the potential to earn the state $110.3 million to $428.1 million per year (with a tax rate between 7 and 15 percent). Per Moss’s report, New York’s subway system now services double the number of riders it did in 1975. In 2017, annual ridership reached 1.7 billion.
The plan is largely theoretical, but it has garnered support from a handful of local officials including City Council speaker Corey Johnson.
With marijuana becoming less taboo (according to the Pew Research Center, 62 percent of Americans support its legalization) and given the MTA’s aging trains and unreliable service, using proceeds from one to shore up the other seems like a solid policy idea. But how much the state could actually allocate toward the MTA and whether the tax revenue would make a significant dent in the $40 billion needed is unclear.
Colorado illustrates some of the limits of a funding plan like this. According to the City and County of Denver director of communication Eric Escudero, Denver will allocate $9 million to mobility projects, like creating bike lanes, repairing sidewalks, and creating medians in 2019. “It’s welcome revenue but it’s not going to solve any issue that needs financial support or taxpayer support,” he says.
A majority of Denver’s tax revenue from marijuana sales goes toward managing the market. Escudero says the city prioritizes investment in regulating the market and enforcing those regulations, as well as education about health and safety when it comes to cannabis. Whatever is left over is then allocated to different sectors of the government.
He adds that the revenue is also unpredictable, as the legal marijuana market is so new and is changing rapidly. The more states that legalize it, the less Colorado may earn, especially if a lot of sales are coming from tourists who may be able to buy it in their own state soon. “It’s helped us with immediate needs now, but generally, we try not to decide on the revenue,” he says. “It’s important that you don’t promise the streets are going be paved with gold because of marijuana, because that won’t happen.”
Colorado is currently one of the only states where marijuana tax revenue has been used to improve transportation. Oregon allocated much of its funds to public schools, and Washington used most of its revenue for different health organizations and initiatives. But as support for legalizing marijuana continues to grow, perhaps its revenue streams will someday be used to make all our commutes a little better.