Marijuana-Legalization Campaign Outraged by Arizona Republic's Erroneous Op-Ed on Tax Revenue

The oversize check presented to the state on Wednesday by backers of a plan to legalize marijuana in Arizona.EXPAND
The oversize check presented to the state on Wednesday by backers of a plan to legalize marijuana in Arizona.
Ray Stern

Backers of a marijuana-legalization plan in Arizona are outraged over an unsigned editorial in the Arizona Republic published August 21 that used an inaccurate tax-revenue figure to bolster its claim that campaign officials were lying.

New Times also noticed the error on Friday morning and left the Republic's editorial page editor, Phil Boas, a message about it. The Republic later issued a correction.  

The Republic's board was responding to a claim made by the Campaign to Regulate Marijuana Like Alcohol's message at the state Capitol on August 19 that its planned November 2016 ballot measure, if successful, could bring in $40 million or more per year to public schools.

The measure would create a system of retail shops in which cannabis could be sold to adults 21 and older and would add a 15 percent tax on sales. After subtracting the money needed to run a new department that would oversee the system, 80 percent of the remaining tax revenue from the program would go to funding all-day kindergarten and public schools.

The unsigned editorial states bluntly that the campaign's figure is a "lie" and suggests that backers of the measure might be so stoned that they'd try to deposit the fake check they used for a prop.

The $40 million is "belied" by Colorado's legalization experience, the earlier version of the op-ed stated: "The Colorado initiative that legalized pot, for instance, promises the first $40 million each year will help pay for school construction. The tax generated $13.3 million last year, and might — might — reach $20 million this year."

The amount is a "pittance" and not worth "the dangers of making pot more available to children," the editorial said. The writer further states that the Arizona campaign's $40 million estimate is "outlandish" and "fake." But it's really neither.

Colorado, which charges a 15 percent tax on retail pot sales, did in fact raise $13.3 million for schools in 2014, the Colorado Department of Revenue confirms.

"Where the [Republic] article got it wrong was when it said the excise tax might generate $20 million this year," says Tommy Moore, spokesman for the revenue department's Marijuana Enforcement & Taxation department. "So far, the excise tax has generated over $16 million as of June 2015."

At this pace, it probably already has hit $20 million and is on target to surpass $30 million for 2015. But revenue collections have doubled since this time last year, meaning that if the rate of revenue coming in keeps going up, Colorado schools may indeed get their $40 million, or close to it.

Full cannabis-tax statistics can be found on the Colorado revenue department's website.

A June article on the Denver Post's Cannabist website quotes a cannabis-industry lawyer saying the state's first year of legal marijuana sales had transition problems that limited sales and corresponding issues.

"If the AZ Republic's editorial board had any integrity, [members] would have asked for the data to support our estimates," says J.P. Holyoak, chair of the Campaign to Regulate Marijuana Like Alcohol. "I offered our data, and they didn't even respond. Clearly, they aren't interested in anything that resembles honest journalism."

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"The true facts speak for themselves," says Barrett Marson, spokesman for the campaign. "The backers of the Colorado initiative were pretty much on target. Our revenue projections are conservative estimates."

Arizona's more limited medical-marijuana program collected about $10 million in sales tax for the state, counties, and cities in 2014, as can be extrapolated from the Arizona Department of Health Service's end-of-the-year statistics. And that was with an average of about 55,000 patients. As of this month, the number of qualified patients is about 80,000 and climbing, while the estimated number of total marijuana users in Arizona is five to six times higher than that.

So, it's not much of a stretch to imagine that if marijuana was legal for all adults 21 and older, the state would receive that $40 million or more for schools each year.

Boas left a message for New Times admitting the error had been made, adding that a correction would be published.

Marijuana-Legalization Campaign Outraged by Arizona Republic's Erroneous Op-Ed on Tax RevenueEXPAND
"Mark" via Flickr

The correction, now visible at the top of the opinion article, addresses the incorrect Colorado tax number it gave for 2015: "A previous version of this editorial misstated how much revenue Colorado's legal pot initiative generated." 

The revised column now states that Colorado tax receipts from legal cannabis "are coming in faster this year, but not enough to reach $40 million."

The column changes its tune about what the revenue could purchase. Before, it said the revenue wouldn't "build one high school," but now the Republic thinks the revenue "might be enough to build one high school and start a second."

Even corrected, the column misses the point. Legal marijuana means tens of millions of dollars would pour into state coffers simply by taxing people on something they're already buying on the black market.

This is no lie.

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