House Speaker Charles McCall can’t help but laugh when asked if his Republican caucus members are considering legalizing marijuana to help fill the state’s gaping budget hole.
“In all seriousness, that is one that hasn’t popped up yet,” said the Atoka Republican. “We’re really going to be at the bottom of the options if we’re talking about that.”
But industry observers say a growing number of cash-strapped states and municipalities across the country are turning to legalization — and the heftier taxes lawmakers can tack onto marijuana sales — to help fill their own budget gaps and to pay for popular programs like education.
“Here’s an idea, we could dedicate the funding source to higher education,” said Republican state Treasurer Ken Miller jokingly. “We could have a campaign ‘Get High for Higher Ed.’ How’s that?
“I think there’s enough difficult decisions that have to be made on revenue sources that probably talking about legalizing marijuana for that revenue source this session is probably a step too far,” he said.
In all, 28 states plus the District of Columbia have legalized medical cannabis, according to the National Conference of State Legislatures. Eight states and Washington D.C. have legalized the drug for adult recreational use.
“One (reason) is the potential tax revenues and economic activity that can be stimulated by this, but also there are people that feel that the enforcement of cannabis prohibition is not an effective use of the state and local government’s time,” said John Kagia, executive vice president of industry analytics for New Frontier Data, a Washington D.C.-based company that researches the legalized cannabis industry.
This year, 23 states are projected to generate about $90 million from medical marijuana taxes, Kagia said. As five more states fully implement their medicinal programs by 2020, that total is expected to balloon to $518.7 million, he said.
“It is also worth considering the broader economic activity that is stimulated by the activation of this market,” he said. “All of this has a broader stimulative effect on the state’s economy beyond just the taxes being paid on cannabis.”
Next year, Oklahoma voters will be able to decide whether they want to see if legalization can prove to be a similar economic boon.
Oklahoma is among 17 states that allow limited access to cannabidiol — oils extracted from cannabis plants — to treat seizure-inducing illnesses.
But in a state where more than a dozen counties continue to forbid the sale of alcohol, there are questions about whether the majority of Oklahomans would welcome any form of legalized pot.
“If Oklahomans want to possibly capture more tax money, they’re also going to have to take that collateral that comes with legalization,” said Mark Woodward, a spokesman with the Oklahoma Bureau of Narcotics and Dangerous Drugs.
In the past few years since Colorado legalized marijuana, Woodward said that state has been grappling with more people driving under the influence of the drug, overdoses on edible marijuana products, fires from hash oil explosions and arrests of those trying to sell it untaxed.
Oklahoma lawmakers once believed that legalizing casinos, horseracing, the lottery and alcohol would provide long-term budget boosts, he said
“These states get an early bump, but eventually the newness wears off and they’re having to look for new sources of revenue,” Woodward said. Pot would likely face the same fate, he said.
The agency hopes Oklahoma will be among the last to legalize pot.
Organizers on Oklahoma’s citizen-led ballot petition drive barely managed to scrape together enough signatures to get the measure before voters in 2018.
“I wouldn’t actually bet my money on (legalization) any time soon,” said Amanda Ostrowitz, co-founder and chief strategy officer at CannaRegs, a Denver-based company that tracks marijuana laws. “(Oklahoma) is just a very anti-substance place. It’s not impossible, but I think Oklahoma is a lot more conservative than Florida.”
Proponents of legalization, meanwhile, say state lawmakers don’t plan on hashing out the issue inside the halls of the state Capitol.
Earlier this year, state Rep. Eric Proctor, D-Tulsa, unsuccessfully tried to garner support for a bill that would have allowed medical marijuana for Oklahomans suffering from specific ailments like cancer, HIV or Chrohn’s Disease.
He said his failure proved that his colleagues have no interest in legalizing pot — not even to help fill the existing $878 million budget hole.
Proctor said his measure would have taxed the drug at the state’s current sales tax rates.
“I think (the revenue) would be substantial because there are hundreds of Oklahoma families right now that are going to Colorado and paying a much higher tax than our bill would have allowed for in Oklahoma,” Proctor said. “I don’t think it would (be anything) that would have completely filled the $900 million budget hole, but it would have been a step (toward) that.”
Still, experts caution that lawmakers shouldn’t expect marijuana to be a cash cow.
“At least in other states, medical (marijuana) has not raised a ton of revenue,” said Joseph Henchman, vice president for state projects at the Washington D.C.-based Tax Foundation, a nonpartisan group. His group is agnostic about legalization efforts.
“It’s some money, but not enough to solve all your budget problems.”