You’ve heard “it’s the economy, stupid”; it’s an old expression that defines how people see everything tied to money no matter what else is involved. The marijuana world is a perfect example of how people have lost a lot of their concerns over marijuana dangers over the tax dollars it generates in states like ours where the money is a welcome savior anytime, but it’s a lifeline in times like these.
What marijuana has done for health may be nothing compared to what it has done for the state’s pocketbook. In almost every legal state, taxes have brought money in, hand over fist, but there have been some unforeseen issues that some of that money was not earmarked to handle. The biggest issue is the illegal grow or ‘pop-up’ and dispensary. In California, there are nearly 50,000 illegal grows at any given time and the state spends a lot of tax money chasing down these operations. Law enforcement is not doing this over ego, but because illegal grows use a lot of dangerous chemicals, they use false ads on products and they undercut legal operations, siphoning off up to 40 percent of California’s tax money while damaging waterways, making users sick and they have killed a lot of wildlife and farm animals. It’s a dangerous game. And it costs a lot of money that no one could have foreseen in the budget.
Oklahoma is home to pop-ups as well. There are some local dispensaries that buy their illegal untested products, selling it at cheaper prices to a customer base in search of a good deal. We don’t know if the dispensary pays taxes on the MMJ or not, or if much of the MMJ stays on the black market, but we do know that if you are growing marijuana illegally, Oklahoma law enforcement is looking to chat with you. Give them a call please.
But we need to discuss the economics. Because that’s what’s REALLY important to politicians. As you may recall, Oklahoma supported keeping dispensaries open during the early days of the epidemic and they netted around $29 million in state and local taxes March through May. We understand that they also did very well for June and July, despite peoples’ fiscal concerns.
So why are lawmakers and politicians making legal growers and dispensary owners’ lives so difficult? Alcohol distributors are not suffering the fate of the marijuana industry. Liquor stores are not shut down for being one day late on a tax bill, alcohol manufacturers are not being stifled by logos, advertising or distribution. Governor Stitt is still trying to shut down 1,000 marijuana businesses by September 30, regardless of the income, a state that is always in the bottom 10 where economics is concerned and in the top five for incarcerations. Shouldn’t he be encouraging the medical marijuana industry?
That’s an economics question we don’t have the answers to just yet, because the issues with legalizing marijuana federally are not as clear as it would seem. Even when marijuana is legalized, the black market thrives; the growers have no ethics for users’ health, environmental concerns or impacts to the neighborhoods they set-up in. The expenses to fix what they leave behind are extensive. But the income to the prison systems are enormous.
Federally, there are corporate interests that do not want to see marijuana legalized; pharmaceutical industries, the medical and psychiatric communities and federal law enforcement and immigration are just a few of the federal agencies that stand to lose big if marijuana is legalized at the federal level. Entire departments at the federal government will be eradicated if marijuana goes legal federally. We researched the number of federal employees who could be unemployed and no one seems to know how many, but it could be as much as 3-5 percent.
Then there’s the federal tax. Marijuana taxes would have to be paid at the fed level too, but what is the right amount? Some economic think tanks think that amount could be as high as 10 percent, but others say taking as little as two to five percent would be fair. If federal and state entities could play nice, state taxes could come down significantly and the overall tax nationwide could be no more than 15 percent.
Marijuana dispensaries have brought with them associated businesses that only now we are seeing the benefit from. In Tahlequah, I noticed that an ice cream shop and pizza parlor opened up not long after a few dispensaries on Muskogee Avenue opened their doors. Restaurants have stepped up their game in my little town. It makes me feel good to see that a restaurant beyond fast food can get attention. The effects in other towns is noticeable too. It’s an economic entourage effect.
What is certain for Oklahoma is that marijuana has been a boon to the economy on a level we did not anticipate. Do we need to shut down 1,000 cannabis businesses statewide? Perhaps there has been a flood of them, but until the economy recovers from Covid-19, I would rather see any business filling space in my town rather than boarded-up buildings and the decimation of a dying downtown. If the marijuana biz fades, what will the associated biz’s do? To watch the flailing decimation of a dying downtown is not worth it no matter what shops move in or out.
Until then, it is the economy, stupid.