While Connecticut opted not to legalize and tax recreational marijuana sales this year, many lawmakers saw the pot market as a revenue source that could rake in tens of millions of dollars annually for the state’s coffers.
But a new analysis by Pew Charitable Trusts found that states with legalized pot sales are struggling to predict how much they can haul in on an annual basis.
“Forecasting revenue from a product that was illegal just a few years ago, and remains so under federal law and in most states, presents a unique challenge for state budget planning,” the report’s authors wrote.
In Nevada’s first six months of collecting marijuana taxes, funding came in 40 percent higher than finance officials had expected. By contrast, revenue from cannabis taxes in California was 45 percent below projections during the first six months of collection.
Analyzing marijuana markets that were illegal in all states five years ago has been a challenge, the report says, let alone determining what price consumers will accept and predicting how the market might grow. By comparison, states can draw from decades of experience when forecasting alcohol and cigarette tax receipts.
Complicating that further is a growing diversity of cannabis products, unreliable polling data on drug usage and new competition among bordering states developing each year.
Legal marijuana sales began in Alaska in October 2016. Ken Alper, who directed the tax division of Alaska’s Department of Revenue until December 2018, told Pew analysts that polls were problematic when it came to developing revenue estimates. “Clearly if some random person calls on the phone and asks, ‘Have you smoked marijuana?’ at a time when it’s illegal, many people are inclined to lie,” Alper said.
Oregon became one of the first states to conduct an