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New report finds legalizing medical marijuana in Wisconsin unlikely to generate large revenues

New report finds legalizing medical marijuana in Wisconsin unlikely to generate large revenues

Marijuana (copy)

A 23-year-old Madison, Wis., resident smokes a joint in a downtown apartment on March 31, 2019.

As Wisconsin lawmakers continue weighing plans to legalize and tax medical marijuana, a new report finds that doing so in other states hasn't generated as much revenue as some proponents might expect. 

On the flip side, it also shows that legalizing the drug for medicinal reasons doesn't guarantee that allowing it for recreational use will automatically follow — a concern that's recently been voiced by a top Republican Senate leader. 

The findings, from the nonpartisan Wisconsin Policy Forum, come in the weeks after a group of lawmakers in the state pushed legislation to legalize medical marijuana — the first bipartisan effort on the topic since 2001. 

The Wisconsin Policy Forum's report analyzed the 33 states that have legalized marijuana for medical or recreational use as of this fall. The figure includes three states bordering Wisconsin: Minnesota, where it's legal for medicinal purposes, and Illinois and Michigan, which recently passed laws to allow for recreational use.  

Of those states, 22 have or will legalize medical marijuana as of the beginning of 2020, while the remaining 11 have fully legalized it. 

But across those medical marijuana states, the report found, officials vary widely in their tax and fee policies and only some publicize the revenue they collect from it. 

Specifically, most states require consumers pay a fee of between $25 and $200 to be included on a cannabis registry. On top of that, many also levy some sort of sales, gross receipts or excise tax. In all, the report found most states are collecting $10 million or less in annual revenue from taxing medical marijuana. 

"As can be seen with these states, the notion that revenue from the taxation of medical marijuana can be 'transformational' for state budgets is misplaced, though that may not be the case for recreational marijuana," the report states. "For perspective, revenue collected from cigarette taxes in Wisconsin in FY 2019 totaled $514.3 million." 

Meanwhile, the report looked at the path to legalization taken in the states that have or are poised to allow medical or recreational marijuana use. Of the 33, 17 states had legalized medical marijuana through a ballot initiative rather than legislation. And nine of those states have gone on to OK marijuana for recreational purposes.   

But in Wisconsin, individuals aren't allowed to add a binding referendum to a ballot via petition, so the only way the state can legalize medical or recreational marijuana is through gaining legislative approval. 

Only Illinois has approved medical marijuana via legislation and then gone on to do the same for retail sales and use by adults for recreational purposes. Vermont is poised to do the same, though lawmakers haven't yet approved retail sales, the report found. Fourteen other states that have approved medical marijuana through a bill haven't yet legalized it for recreational purposes.

"This suggests the possibility that medical marijuana legalization will lead to recreational legalization may be much less of a concern in a state that does not have a ballot initiative process, as is the case in Wisconsin," the report notes.

The analysis also shows that no state has yet pursued limiting medical marijuana's availability to pill form — a suggestion Assembly Speaker Robin Vos made this week. The Rochester Republican, who has said he's open to the idea of legalizing medical marijuana, also said "it shouldn't be smoked."  

Currently in Wisconsin, the bill lawmakers are kicking around would require patients with a qualifying condition to have a doctor request a registry identification card on their behalf from the Department of Health Services, which would be required to establish a medical cannabis registry. Only those with medical conditions such as cancer, HIV/AIDS, Alzheimer's, post-traumatic stress disorder and other medical conditions could qualify.  

The bill would also require potential medical marijuana producers, processors or dispensaries to get a license from the Department of Agriculture, Trade and Consumer Production, and applicants would need to pay an up-front fee of $250 and an annual fee of $5,000 to operate.

Rep. Melissa Sargent, D-Madison, has also introduced a bill that would fully legalize marijuana.

Senate Majority Leader Scott Fitzgerald, R-Juneau, has previously said he wasn't on board with the legislation, adding in a September statement that "everyone knows that medical marijuana leads to legalized marijuana."

While such a plan would face roadblocks in the Senate, the East Wing is a different story. Democratic Gov. Tony Evers had sought to legalize marijuana in his budget proposal, as well as decriminalize the possession of small amounts of weed. 

Both Evers' proposal and the bipartisan bill would likely result in at least several thousand legal users across the state, the Wisconsin Policy Forum report noted. The plans also include production and user fees that are in line with rates throughout the rest of the country, though it's unclear what the revenue side would fully look like. 

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Briana Reilly covers state government and politics for the Cap Times. She joined the staff in 2019, after working at Follow her on Twitter at @briana_reilly.

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