Cannabis Science & Policy Summit - Day 1 - Midgette

Marijuana Legalization in Vermont:

Assessing the Policy Landscape and

Some Revenue Implications

Greg Midgette PhD

April 17, 2016

Slide 2

• Commissioned by

State of Vermont

• Eight chapters,

80,000+ words

• Does not make a

recommendation

• Not a cost-benefit

analysis

• Goals: Provide insights

for discussions and

highlight uncertainty

Slide 3

Quick Background on Vermont

Slide 4

Marijuana prevalence in Vermont

higher than in rest of country

0%

2%

4%

6%

8%

10%

12%

14%

2002/2003 2013/2014

% using

marijuana

in past month

Year

US

Northeast

Vermont

Source: NSDUH

Slide 5

Marijuana prevalence in Vermont

higher than in rest of country

0%

2%

4%

6%

8%

10%

12%

14%

2002/2003 2013/2014

% using

marijuana

in past month

Year

US

Northeast

Vermont

Source: NSDUH

Slide 6

Marijuana is primary substance for

14% of treatment admissions

Source: Vermont Department of Health, 2014. Only includes those receiving

treatment at state-funded treatment facilities.

Slide 7

How much did Vermont spend

prohibiting marijuana in FY 2014?

• In year after decriminalization, criminal

cases decreased 80%

– But total marijuana cases increased 20%

– Collected $200,000 in fines

Slide 8


cases decreased 80%

• Few incarcerated only for marijuana

– 5 in FY 2014

– 3 behind bars at one point



Slide 9


cases decreased 80%

• Few incarcerated only for marijuana

• Net costs: $800,000 - $1.1 million

– For those ages 21+: $550,000 - $750,000



Slide 10

The Legalization Discussion

Slide 11

Extreme options

Commonly-discussed options

Middle-ground options—Small scale

Middle-ground options—Large scale

Report discusses 12 alternatives

to status quo supply prohibition

Slide 12

Extreme options




Senate Bill 95

Slide 13

Extreme options




Senate Bill 241

Slide 14

Extreme options




House Committee Amendments to SB 241

Slide 15

Projecting Tax Revenues from

Marijuana

Slide 16

Tax revenue:

Many factors to consider• Actions of other jurisdictions

– How long would Vermont be only east coast

jurisdiction that legalized production?

• Collateral effects

– E.g., effect on spending on alcohol and tobacco

and, hence, their taxes

• Other effects on tax revenue

– Tourism, employer taxes, productivity losses

• Focus here is on revenue from MJ sales

Slide 17

Approach for projecting effects on

taxes paid by Vermont users

Slide 18

Slide 19

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Slide 21

• Police enforcement

– Underage use

– Impaired driving

– Time/place violations (like open bottle laws)

– Residual black market

– Bootlegging (tax evasion)

• Regulatory costs

Cannot ignore offsetting costs

Slide 22

Washington forecasted spending

~$9 million on I-502, 2012-2015

Slide 23

Cost of regulation: Key points

• Regulation could be more expensive than

VT’s current (weakly enforced) prohibition

• For any “large-scale” legalization option,

both start up regulatory costs and on-going

costs could well be in low single-digit millions

of dollars per year

• Start up costs

– Incurred before sales generate tax revenue

– Many paid “in-kind” (extra work load)

Slide 24

When it comes to annual revenues,

think orders of magnitude

• About $1 million: Current prohibition cost

• Low to mid-single digit millions: Developing

and regulating large-scale options

• Tens of millions: Tax revenue from VT users

• Hundreds of millions: Tax revenue from out-of-

state residents if federal government does not

intervene and VT industry ramps up before

nearby states legalize

Slide 25

Other potential costs

• Increased use/abuse could create other costs

– Greater need for marijuana treatment

– Greater need for prevention messaging

– More impaired driving

– Costs to employers of juggling conflict with federal

drug-free workplace requirements

• All highly uncertain

– In some cases not even clear costs will exceed

savings

Slide 26

Giant wildcard: Legalization’s

effect on use of other substances

• Interactions on product/supply side also

unknown

Slide 27

Concluding thoughts

• Vermont should be commended for

seeking a rigorous study beforehand

• Uncertainty abounds

• There are many options

• All involve tradeoffs

• What option is “best” depends on

observer’s values/objectives