Legal marijuana could be a $130 million a year business in DC, officials find

By Mike DeBonis,

Should D.C. residents vote to legalize marijuana possession next week, it would take a step toward creating a $130-million-a-year, legal cannabis market in the city, D.C. financial officials have determined.

The ballot initiative voters will see Tuesday does not allow for the sale of marijuana — only the possession and home cultivation of small amounts — but D.C. Council members gathered Thursday to hear testimony on what a legal sales regime might look like.

Testimony prepared by city financial officials pegs the potential size of the market at $130 million a year — based on an estimate of 122,000 users, including residents, commuters and tourists, each consuming three ounces of marijuana costing an average of $350 per ounce.

An initial version of a marijuana regulation bill before the council sets a sales tax of 15 percent, suggesting yearly government revenues of nearly $20 million.

But the financial office declined to estimate tax revenue, citing the unfinished nature of the regulatory legislation and the difficulty of determining how many current marijuana users will migrate from the black market to legal, taxed purchases.

Given the complexity of writing and implementing regulations, the officials said, it does not expect the city to reap any revenue before late 2016.

A system of legal marijuana sales would also come with considerable costs to the District government, the testimony indicated, requiring the hiring of seven to 11 additional personnel and the purchase of new systems and equipment.

More than 50 members of the public are scheduled to testify at Thursday’s council hearing, and a deputy to Chief Financial Officer Jeffrey S. DeWitt is expected to testify afterward on the financial implications of legalized marijuana sales.

The bill currently under consideration, drafted by David Grosso (I-At Large), would tax recreational sales at 15 percent and send those proceeds, along with fees paid by cultivators and retailers, to variety of agencies and programs, including police training, youth programs and efforts to combat substance abuse. The District’s alcohol regulators would assume responsibility for overseeing the marijuana sales regime.

But council members and other officials remain wary of potential congressional intervention, which could stamp out the District’s marijuana legalization efforts before they take effect.

Early in Thursday’s hearing, Grosso called the prohibition of marijuana a “complete failure” in D.C. and the nation, and he said he was committed to developing rational, well-regulated legalization framework in the nation’s capital.

“It is time for the District of Columbia to step up and address this issue in a thoughtful and measured way,” he said.

Other witnesses included legalization advocates, the owner of a medical marijuana dispensary, and policy experts who have studied the legalization efforts in Colorado and Washington. Opponents of the legalization initiative are scheduled to testify later in the day.

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Legal marijuana could be a $130 million a year business in DC, officials find