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How Much Tax Revenue Could Recreational Marijuana Bring to Arizona

MARK BRODIE: Arizona voters last month approved Proposition 207, which legalizes recreational marijuana in the state. Once sales start, buyers will have to pay state, county and city sales taxes. Marijuana will also be subject to a 16% excise tax with that money going to law enforcement, community colleges and other programs. Arizona is one of four states in which voters legalized recreational marijuana in this year’s election, and a new analysis looks at the kind of revenues those states — as well as those who’ve already legalized pot — might expect from the newly legalized product. With me to talk about it is Alexandria Zhang, a research officer with the Pew Charitable Trusts State Fiscal Health Project, who helped worked on the report. And Alexandria, broadly speaking, given where states are fiscally and where the economy is more broadly, what kinds of revenues might states be looking at coming in for marijuana in the next year or so?

ALEXANDRIA ZHANG: I think the most important point is that it’s really hard to predict how much a state will take in from taxes on recreational marijuana. To give you a sense of the scope though, Colorado, in fiscal year 2020 — which is the most recent fiscal year — brought in a little over $300 million in recreational marijuana revenue. And while that is not an insignificant amount of money, that amounts to only 1% of the state’s total budget.

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