I-502’s fiscal result remains hazy

SEATTLE – The state’s latest financial analysis says legalizing and taxing marijuana could bring Washington as much as nearly $2 billion over the next five years – or as little as nothing.

The Office of Financial Management released its fiscal impact statement for Initiative 502 on Friday, and the results track closely with its earlier analysis, released in March.

I-502, which will be on the November ballot, would legalize pot under state law and allow its sale at state-licensed stores, with tax proceeds dedicated to education, health care and substance abuse prevention. Oregon and Colorado voters will also decide on marijuana legalization measures this fall.

Marijuana would remain illegal under federal law, however, and it isn’t clear how the federal government would respond if any of the states voted to legalize it. The Justice Department could prosecute employees of state-licensed pot shops, sue in federal court to block the laws from taking effect, or simply seize the tax revenue from the states as proceeds of transactions that are illegal under federal law.

Because the federal response remains unclear, Washington’s analysts said they could not determine the ultimate effect of I-502 on the state’s finances. However, they said, assuming a fully functioning marijuana market develops – and that it entirely replaces the existing illicit market – state revenue from pot sales could be more than $1.9 billion over the next five years. The state typically spends $30 billion per two-year budget cycle.

I-502 would create a system of state-licensed growers, processors and stores, and impose a 25 percent tax at each stage. People 21 and older could buy up to an ounce of dried marijuana, one pound of marijuana-infused product in solid form, such as brownies, or 72 ounces of marijuana-infused liquids.

The analysis anticipates 100 state-licensed growers supplying 328 marijuana stores that would sell more than 187,000 pounds to at least 363,000 customers. Those numbers are based on federal drug-use surveys.

Consumers would pay $12 per gram – the price currently charged by many medical marijuana dispensaries – plus the 25 percent marijuana tax, 10 percent state sales tax, and any local sales tax, the analysts assumed.

The document noted that Washington would likely lose some federal money to fight drugs, such as a marijuana eradication grant from the Drug Enforcement Administration.