NY Marijuana Legalization Study Part 2 of 3

Yesterday I posted a blog about the recently released NY Marijuana Study.  I covered some basics and the health analysis and impacts of legalizing recreational marijuana in New York.  Today’s post is part 2 of 3 and will cover criminal justice and public safety.  I will also cover the economic effects of legalization of recreational marijuana in New York.  You will recall that the report’s conclusion was that it is “less of a question of whether to legalize but how to do so responsibly.”

NY Marijuana Legalization and Criminal Justice and Public Safety

NY Marijuana Bud

Driving Impaired:

The NY Marijuana report goes into great detail about the impact of marijuana arrests on the population.  One of the most interesting, is the rate of intoxicated drivers. In 2007, 8.6% percent of drivers tested positive for marijuana derivatives. Six years later that increased half again as much to 12.6%.  At the same time, the percentage of drivers testing positive for alcohol declined from 12.4% to 8.3 percent.

Interestingly, the rate of intoxicated drivers stayed nearly the same (21% to 20.9%) over that time period,  A fair share of the population was driving on hooch maybe switched over to marijuana? The NY Marijuana report noted the statistics but did not make any conclusions. It did say that THC was the most prevalent drug detected in drivers.

Identifying Impaired Drivers:

It goes on in some length about how hard it is to identify intoxicated drivers because there is no easy way to test for it.  You can make someone walk the straight line test and you can get a blood test if it’s fairly soon after the arrest.  The blood test is almost useless though because marijuana users can have marijuana in their systems for a long time. So a blood test wouldn’t present strong enough evidence of current intoxication to hold up in court.

Conclusion on Traffic Safety:

The NY Marijuana Report’s conclusion is that legalization raises valid concerns about traffic safety and it will have impacts on law enforcement budgets and workload. It recommends several essential actions including:

  • Enforcing the under-21 purchasing ban;
  • Reducing the illegal market and preventing diversion;
  • Having a strong tracking system and a robust monitoring system;
  • Fines for this and fines for that;
  • Ensuring strong security at cultivation and dispensing facilities.

Some Public Safety Statistics that May Shock You:

  • In the last 20 years there have been more than 800,000 arrests for NY marijuana possession;
  • The arrest rate for NY marijuana crimes in 2010 was 535 per 100,000 people and that was not only the highest of any state and also double the national average;
  • 86% of the people arrested for marijuana possession in the fifth degree last year in New York were people of color; 48% Black, 38% Hispanic and only 9% White.

Marijuana prohibition clearly results in disproportionate criminalization of ethnic minorities. The report notes that experts say the best way to fix this inequity is to legalize recreational marijuana.

 

NY Marijuana Legalization and Economic Effects of Recreational Marijuana in NY

The NY Marijuana Report details the economic projections of the effects of legalization in NY and also in the states (and Canada) on NY’s borders.

No surprise here,  the major economic conclusions of the NY Marijuana Study are that legalization of recreational marijuana would generate tax revenue and would result in long-term costs savings.  Long-term cost savings would result from a reduction in the cost of police time, court costs, prison costs and administrative fees.  It acknowledges an increase in costs associated with the implementation of legalization but projects that the revenue generated would make this a money-making enterprise for the state after the first year.

Job Creation Due to Legalization:

The report gives statistics about job growth in Colorado after legalization (source: Marijuana Policy Group) and of course implies that this can be multiplied exponentially in NY because of the NY population.

Employment in Colorado from 2014 to 2015:

  • Employment in the industry went from 9,936 to 12,591 in one year.  This includes:
    • 4,407 in retail operations;
    • 2,770 administrative;
    • 2,015 manufacturing;
    • 1,889 management;
    • 1,511 agriculture specialists.
  • Additionally the indirect job growth attributed to legalization was 4,272 in 2014 and 5,414 in 2015
  • Total marijuana jobs from 2014 to 2015 – 14,209 to 18,005 – 27% rapid job growth.

 

Size of the Market and Tax Revenue:

The writers of this report did some interesting math to get to their revenue projections.  They took the current population from census data and determined that by applying the 2016 National Survey on Drug Use and Health reported rate of drug use, pegged at 8.5%, NY has an estimated 1.27 million marijuana users.

Then they took that 1.27 million and added 20,000 travelers to NY and concluded that 1,290,000 people would consume marijuana in NY in the first year of legalization. More facts that were introduced to get the revenue projections:

  • Two available studies peg average use at 5 ounces and 7.9 ounces per person each year;
  • Average retail price of marijuana is $270-$340 per ounce depending on quality;
  • Total purchases of illegal marijuana between 6.5 million and 10.2 million ounces;
  • Estimates the size of the current illegal market for marijuana in NYS ranges from $1.74 billion to $3.5 billion annually.

Estimated Tax Revenue in the First Year:

  • With a price of $297 and illegal market consumption of 6.5 million ounces ranges from $248.1 million (with a 7% tax rate) to $340.6 million (with a 15% tax rate).
  • The estimated potential total tax revenue ranges from $493.7 million (with a 7% tax rate) to $677.7 million (with a 15% tax rate).

The report is very careful to note that the higher the tax, the more likely the illegal black market stays in business.  It even notes that a few states have had to lower their marijuana taxes to get people to buy legal marijuana instead of illegal marijuana! So higher price = higher revenue to the state, but keeps black market in business.

New York politicians (both parties) have never met a tax they didn’t like.  This is going to be very interesting.  Will they keep taxes low and put the illegal market out of business? Will they set the taxes high and show their true motivation for legalization? – just to get the tax revenue.  I am going to watch this closely and will let you know.   Taxes or public health and safety?  Which do you predict?  One model might be similar to a bill in NJ. The tax would be set at 7% in year 1 to get people to switch their marijuana source and then it would gradually increase to 25%!

Revenue Risks:

There are many risks to the revenue gravy train:

  • Home cultivation.  Most states where recreational marijuana is legal allow consumers to grow a certain number of marijuana plants.  I think that would be a widespread practice. If taxes get too high it would be near universal.
  • Also local communities can ban the sale of marijuana, which is a problem in just about every state.  People are fired up (pun intended) when the voted on a ballot measure to make it legal and then they cannot get it in their own community.
  • The limits on the amount you can purchase can also be a limiting factor.

All of these can lead to an increase in marijuana purchased on the illegal market and will reduce the amount of tax collected.

The impact on medical marijuana supply, business and tax revenues will have to be balanced with the legalization rules since both medical and recreational have a direct impact on the taxes collected.

Tomorrow’s Blog:

I will finish up my summary of NY’s report with youth, education and implementation of a recreational marijuana program in NY.