Reports released by the Department of Finance and Administration last week estimated that each of the two competing marijuana proposals, Issue 6 and Issue 7, could cost taxpayers millions of dollars.
Marijuana proponents have touted the fact Issues 6 and 7 both tax so-called “medical” marijuana. The Arkansas Department of Finance and Administration analyzed the tax revenue the two measures would “generate” compared to the administrative costs to the state.
DFA estimates each measure would provide approximately $2.1 – $2.5 million in tax revenue each year. However, DFA estimates Issue 6 could cost as much as $3.1 million to administer, and Issue 7 could cost the state as much as $4.9 million to administer.
In other words under either proposal taxpayers could be on the hook for anywhere from $1 million to $2.8 million each year to fund the state’s marijuana program.
Both proposals increase the workload of the Arkansas Department of Health by requiring it to process applications for marijuana cards and maintain personnel for the state’s marijuana program; DFA estimates Issue 6 would force the Health Department to hire 10-13 new employees, and Issue 7 would force the department to hire 23-63 new employees.
Issue 6 increases the workload of the Alcoholic Beverage Control board, and it creates a new state commission to help oversee marijuana in Arkansas; both proposals increase the workload of DFA, which provides legal and administrative assistance to other agencies.
Additionally, the Arkansas State Police estimates it would need $2.9 million if either marijuana proposal passes.
These reports track with findings issued 4 years ago under Governor Mike Beebe’s administration. At that time state officials determined a marijuana proposal similar to Issue 7 would cost the state severely.
Simply put, marijuana legalization is not revenue-neutral. Even if marijuana is taxed, it is unlikely the state will recover all of the revenue it loses administering the “medical marijuana” program and ensuring compliance with “medical marijuana” laws.