Arizona's Week in Weed: Legal Pot a Potential Tax Windfall, Cannabus, and Driving High

Arizona could reap more than $113 million annually in legal pot sales, says the Tax Foundation.EXPAND
Arizona could reap more than $113 million annually in legal pot sales, says the Tax Foundation.

From the tons sold in state-legal medical-marijuana dispensaries to the tons imported each year from Mexico, Arizona is a place that knows its cannabis. Here's a roundup of some of last week's biggest news stories about marijuana that affect the Grand Canyon State...

Legal Marijuana Would Be Tax Windfall for U.S. and Arizona, Tax Foundation Says
Most of the money Americans spend on marijuana goes to illegal sources, but a "mature" legal market in the country could be a tax bonanza, according to the nonprofit Tax Foundation.

Two reports released this week by the Washington, D.C.-based group shows what might be possible if the nation decided to tax cannabis consumers instead of persecute them.

"Marijuana Legalization and Taxes: Federal Revenue Impact," by Gavin Ekins and Joseph Henchman, states that the United States as a whole could reap up to $28 billion in tax revenue, a figure that would include state retail marijuana taxes, plus "$7 billion in federal revenue: $5.5 billion from business taxes and $1.5 billion from income and payroll taxes."

In "Marijuana Legalization and Taxes: Lessons for Other States from Colorado and Washington," authors Joseph Henchman and Morgan Scarboro analyze the potential tax revenue for states and look at challenges of legalization, such as the best way to tax pot. A chart that breaks down the likely tax revenue per state shows that a 15 percent tax on retail cannabis products — like the one proposed by the Campaign to Regulate Marijuana Like Alcohol — could reap $113 million annually in Arizona.

Some other interesting highlights:

  • Cannabis tax revenues in Colorado and Washington "have exceeded initial estimates," but sales tax collections might start off slowly.

  • The national cannabis market is about $45 billion a year now, and Americans consume about 26 million pounds annually.

  • Pot's price will fall as more supply is added to the market, which will decrease sales tax revenue "somewhat."

  • Taking a cut of the final retail sale is the best way to tax cannabis, compared with schemes like taxing cultivators or by the level of THC.

  • "Society pays all the costs regardless of legality but tax revenues help offset those costs."

Henchman, the Tax Foundation's vice president of operations, traveled to Colorado and Washington to get a firsthand look at the retail cannabis industry.

"I'm the opposite of a marijuana user — I've never consumed marijuana or its many forms," Henchman tells New Times. "It was all surprising and new to me, seeing how they built this industry from the ground up."

(In 2014, voters in Henchman's hometown of Washington, D.C., legalized possession and cultivation for personal use, but sales remain illegal.)

There's no question that black-market dealers have taken a big hit to their market share, and that consumers are willing to pay a "price premium" for legal weed, Henchman says.

"They don't really like sneaking around the park or dealing with dealers, and would prefer to go to a store that has health inspections and a return counter if there's a problem," he elaborates. "That being said, the black market is still sizable in both Colorado and Washington, partly because their tax rates are so high."

Last year, Washington reset its recreational marijuana tax to 37 percent of the retail price at stores. Colorado charges consumers a 10 percent recreational pot tax, plus a 2.9 percent state sales tax and local sales taxes.

AAA Releases Warning About Marijuana and Driving
A news release last week from the American Automobile Association about driving under the influence of marijuana caused a minor media buzz.

Although the release rehashed data from a report issued last year by Washington state, the venerable motor club has a certain gravitas when it comes to all things automotive.

"Reefer Madness: Fatal Crashes Spike after State Legalizes Drug — Legal limits for marijuana and driving are problematic, says AAA," reads the announcement's red alert. 

But despite the fact that some of findings were touted by the Arizona anti-legalization group Arizonans for Responsible Drug Policy, once you get past the sensational headline the report was even-handed. It pointed out the limitations of the data involving blood tests on dead drivers, as New Times has done in previous articles. While statistics indicate a spike in fatal crashes involving people who test positive for THC, the stats don't give any information about who caused the crashes or when a THC-positive driver last partook.

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The part about legal limits being problematic cuts both ways, AAA points out. Some people aren't impaired even with levels of THC in their systems that would be illegal in their respective states, while other people may become very impaired after consuming relatively small amounts of THC.

Linda Gorman, spokeswoman for AAA Arizona, said on KJZZ news radio last week that AAA isn't taking a stance on legalization but hopes to provide "interesting dialogue" and urges consideration of "up-to-date" impairment.

The state's current crash reports, Gorman added, don't track marijuana usage — they just have places where police can note alcohol use or drugged driving in general.

Better data collection, however, is just down the road. Last year, New Times persuaded state authorities to put a check-box for marijuana use on crash reports so police and the public can get a clearer idea in the future of how marijuana affects drivers. Alberto Gutier, director of the Arizona Governor's Office of Highway Safety, said the changes to the forms could be made as soon as this year.

The Cannabus crewEXPAND
The Cannabus crew

Spreading the Word of Legalization, the "Cannabus" Rolls into Prescott
Supporters of Arizonans for Mindful Regulation have been tooling through the Prescott area in a bright-green "Cannabus."

The bus, owned, by Stacey Theis, will be "saturating" the area until today, then departing to take the message of legalization to other areas of the state, Theis told the Prescott Valley Tribune last week.

Prescott is home to one of state's staunchest defenders of felony prohibition in Arizona, Yavapai County Attorney Sheila Polk.

Last month, AZFMR issued a "final plea" for volunteers to help collect signatures. Its leader Jason Medar wrote that the group was struggling. But the passionate — sometimes overly so — supporters of the grassroots organization hope to give voters a more-permissive legalization alternative. Besides making possession and cultivation legal for adults and 21 and older, the measure would grant 1,500 retail cannabis-store licenses — about 600 more than Colorado has now — and make selling marijuana on the black market a misdemeanor in many cases.

Arizona Congressman Trent Franks Talks About His Opposition to Legalization in New Video
Set to a backdrop of scary piano music, longtime Arizona Congressman Trent Franks discusses why voters should keep felony prohibition in place and reject cannabis legalization.

Franks, a Republican who represents the state's Eighth Congressional District, pushes the gateway theory and says that as a boss, he knows firsthand that people who use cannabis make "lousy employees."

Have a listen (if you're looking for a reason to get ticked off at a hypocritical conservative):


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