Colorado is set to become the first U.S. state to regulate and tax sales of recreational marijuana, after lawmakers approved several bills that set business standards and rules. Legislators expect enforcement of the rules to be paid for by two taxes on marijuana — a 15 percent excise tax, and a 10 percent sales tax. – NPR
As with current taxes on cigarettes and alcohol, potential revenues from the sale and consumption of legalized marijuana could bring in tens, if not hundreds of millions of dollars to state budgets in need of new revenue sources. In fact, the planned tax of 25% is far greater than the tax rates already added to a pack of cigarettes in the state of Colorado, which currently ranks 31st in the nation in this category.
It is an interesting economic and societal trend in history that during difficult economic times, such as in the Great Depression, consumers will pay for, and willingly spend necessary and disposable income on recreational items they use for short term pleasures in the wake of dire or stressful times, even at the expense of items such as food, clothing, and other needful products.
Sales of cigarettes and even bootleg alcohol beat the recessionary trends during this era, and because the sale and distribution of alcohol was illegal, the government failed to profit from most revenues in the multi-million dollar black market.
The majority of states in America now have budget deficits, and a growing crisis in their pension funding. At the same time, the Great Recession has continued into its 7th year, with more people applying for welfare and disability than finding good paying jobs.
As these standard tax revenue sources continue to dry up for state governments, the willingness to legalize what was once considered illegal, to help provide new tax sources and revenue, could be a growing trend in the near future for states across the country.