When State Revenue and Personal Freedom Coincide
What Gambling Can Tell Us About Legalizing Marijuana
I am old enough to remember when Nevada was the only state where gambling was legal. In 1931, during the Great Depression, the state legislature had legalized casino gambling as a way to stimulate their economy, create new jobs, and entice more people to the state.
For decades Nevada had a monopoly on casino gambling — that, along with legalizing “no fault” divorces, and later legalizing prostitution — when most states did not offer those options. These factors combined to give Nevada a reputation as a maverick state where people could visit to engage in naughty behavior without legal consequences. “What Happens in Vegas Stays in Vegas.”
The state is expected to legalize the recreational use of marijuana via voter initiative (Question 2) this November, which will further enhance that reputation.
Other states obviously knew that legal gambling was an alternative that might provide an economic boost to their states as well, but the prevailing morality at the time was far too negative towards gambling for elected officials in other states to pursue. It was a time when the religious communities had successfully convinced most Americans that a life of virtue, not vices, was the path to happiness.
But social mores change over time, and as gambling began to be seen as a legitimate form of entertainment, instead of a moral sin, the tax revenue and economic benefits from legal gambling were more attractive. In 1977, by voter initiative, New Jersey legalized casino gambling in Atlantic City, offering an east coast version of Nevada, where gambling hedonists could legally do what they could not yet do in their own states.
And gradually the barriers banning legal gambling began to crumble nationwide, leading to a situation today in which every state has some form of legal gambling, such as state-run lotteries, albeit with strange limitations in some states (e.g., in Missouri it is illegal to gamble on land, but perfectly legal to have casinos on riverboats on the Mississippi and the Missouri rivers, although the boats never leave the shore).
The Balancing Test.
Which leads to the question of why behavior thought by many to be inappropriate (or even morally offensive), can nonetheless sometimes be legalized? Or put another way, when is conduct with the tinge of sinfulness out-weighted by the potential for economic benefits to the states?
I raise that question because of the increasingly profitable side of legal marijuana in the states that have elected to regulate and tax marijuana. As the latest revenue data make clear, legalizing marijuana has been an enormous benefit for the few states that have taken that step, and that fact will be more and more difficult for neighboring states to ignore over the coming years. As we saw with gambling, once the economic benefits of legal marijuana are obvious, the moral opposition will fade and the economic arguments will prevail.
The Latest Data from Colorado and Washington
In Colorado, the first state to get their legal retail outlets up and running on January 1, 2014, the gross sales of marijuana, and the tax revenue to the state, have continued to rise each year. For 2015, licensed marijuana stores in the state totaled an astounding $996,184,788 – just shy of $1 billion dollars, up from $669 million in sales in 2014.
Colorado collected more than $135 million in taxes and fees last year (including $35 million dedicated to school construction), up from $76 million in 2014 (when $13.3 million was raised for schools).
In Washington state, marijuana retail sales reached $322,823,639 in 2015, up from only $30,783,880 in 2014, when retail outlets were open for only a portion of the year. That 2015 sales figure has already been eclipsed in the first seven months of 2016.
The state retail tax revenue for fiscal year 2016 from recreational marijuana sales totaled $30,017,823, while state retail sales taxes from the sale of medical marijuana totaled $5,236,536. Local retail sales tax totaled $11,228,861 from recreational sales, and local retail tax totaled $2,084,323 for medical sales.
These, as Republican presidential nominee Donald Trump might say, are “yugee” numbers, and they are continuing to increase each year, making them more and more difficult to ignore by other states.
Marijuana Legalization is Inevitable
Which brings me to my main point. At a time when several national polls confirm that between 55 and 61 percent of the entire country now favor full legalization, it is difficult to argue that marijuana smoking is, any longer, considered immoral behavior. Sure, there are pockets of fundamental moralists to whom anything pleasurable will always be suspect behavior, including sex, drugs, and rock-and-roll. But this puritanical perspective is finding less and less support each year, and when balanced with the economic windfall that results when a state legalizes marijuana, it simply cannot prevail.
Today a majority of Americans under 65 support marijuana legalization, particularly younger adults: 71 percent of adults under 35 think marijuana use should be legal, a jump of 10 points since last year. The demographics are clear and unstoppable, as younger voters replace those over 65.
Just as all states now have some form of legal gambling, within a few short years, all states will offer some form of legal marijuana. It’s the smart thing to do; it’s the right thing to do; and it’s inevitable in a democracy, when most people want it.
This column originally ran on ATTN:
August 22, 2016