When Illinois lawmakers debated whether to legalize recreational weed, the potential funding from taxing sales was presented as a new way to address the state’s buzzkill of a budget.
But a new study released Monday by the Pew Charitable Trusts urges pro-pot states to tread lightly when estimating revenues for recreational marijuana sales. The report, which analyzes the 10 states that have already legalized recreational pot, warns that programs relying on funding from recreational cannabis could suffer if budgeting projections fall flat.
As a result, states are advised to use the tax revenue for savings or put the money in the bank before budgeting it the following year.
“The hurdles of forecasting recreational marijuana revenue will persist,” according to the report. “Given how unpredictable the marijuana market is, states should exercise caution in budget planning to ensure that the money strengthens, rather than weakens, their long-term fiscal position.”
With recreational legalization seemingly sweeping across the country, issues with forecasting and budgeting will likely become more widespread, the report claims.
In his budget proposal in February, Gov. J.B. Pritzker estimated that recreational legalization could bring in $170 million in dispensary licensing fees in the fiscal year that started July 1. But Pritzker’s $40 billion state budget, signed in June, doesn’t account for potential revenue from recreational sales.
Those tax dollars will be used to cover a range of services and expenditures: administrative costs; a sweeping expungement initiative; public education and safety campaigns; local prevention and law enforcement training programs; mental health and substance abuse services and unpaid bills. But the bulk of the pot money will go to the state’s general revenue fund and a program that benefits communities adversely affected by the drug war.
Initial revenue projections have proved volatile in some states. The report notes that Nevada’s revenues for