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DePasquale estimates up to $581M in annual revenue from regulating, taxing marijuana

Pennsylvania could earn at least $581 million in annual revenue from legalizing marijuana for recreational use, according to a report released Thursday by Auditor General Eugene DePasquale.

The revenue estimate is based on the number of Pennsylvania adults who admit to using marijuana at least once a month (nearly 800,000), the average amount spent by recreational marijuana users in Colorado ($2,080 per person) and a 35 percent tax.

DePasquale modeled the tax on existing levies for alcohol and medical marijuana — a 10 percent producer-grower excise tax, a 19 percent retail-sales excise tax and 6 percent sales tax.

The revenue total is nearly three times an estimate DePasquale made in March 2017, when he came out as a supporter of legalizing marijuana for recreational use. Pennsylvania legalized marijuana for medical use in 2016. It remains illegal for recreational use.

“Imagine what that $581 million could mean for Pennsylvanians,” DePasquale said at a news conference in Pittsburgh with Mayor William Peduto. “Not only would it help balance the state budget, but it would also mean increases to initiatives that affect Pennsylvanians’ lives.”

He encouraged Philadelphia and Alleghany  counties to impose an additional 1-2 percent local tax that could generate $3.8 million and $6.9 million, respectively.

DePasquale said the money could pay for pre-kindergarten programs around the state and be used to increase funding for the Children’s Health Insurance Program, or CHIP. The auditor general also wants to target the state’s opioid epidemic by providing more treatment for addiction and take steps to improve care for veterans.

“Marijuana right now at the federal level is a Schedule 1 narcotic, which to be blunt is insane,” DePasquale said. “For veterans to get access to this care through their veteran’s health insurance program and through the VA, it has to be removed as a Schedule 1 narcotic.”

Other Schedule 1 narcotics include heroin, LSD, ecstasy and hallucinogenic mushrooms.

DePasquale noted that one survey showed a majority of Pennsylvanians, 56 percent, believe the plant should be legal and pointed to the success that Colorado and Washington have seen since legalization.

“The longer we wait to do this and the more other states go down this path, the more Pennsylvania will be a follower,” DePasquale said. “I think we are in a prime position to be a leader on this issue… because the train is pulling away from the station.”

DePasquale likened recreational marijuana use to alcohol consumption and gambling, stating that there may be a medical risk to legalization, but the positives outweigh the negatives when it comes to legalizing.

His report found that an average of 8.38 percent of Pennsylvania adults admit to using marijuana at least once a month, amounting to 798,556 adults. 

“I am not suggesting that this is something that has no drawback,” DePasquale said. “The reason why this is a weighted public policy issue is because there are pros and cons to it. If it was all pro and no con, it probably would have been decided decades ago.”

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