It’ll take major shifts in tax policy for legalized marijuana to offer a meaningful boost to state and local revenues, according to Moody’s Investors Service.
(Bloomberg) — It’ll take major shifts in tax policy for legalized marijuana to offer a meaningful boost to state and local revenues, according to Moody’s Investors Service.
Nearly half of US states have legalized recreational pot over the past decade, with many receiving only a modest uptick in revenue, analysts including Gregory Max Sobel and Grayson Nichols wrote in a Tuesday report. Policy choices, however, have the potential to change that, according to Moody’s.
“Changes in tax structure, regulations and even federal legalization,” the analysts wrote, “have the potential to increase revenue.”
Alaska, Colorado, Oregon, Maryland, Washington and Virginia have all already created task forces to evaluate the fast-changing cannabis business landscape. In Alaska, the unit is already weighing potential changes in the state’s tax structure.
Revenue also stands to be affected as more states legalize recreational marijuana, increasing competition and driving down profits for early adopters such as Colorado and Washington. While federal legalization is unlikely soon, such a move would enable “more competition of growers and sellers across state lines,” according to Moody’s.
In the meantime, the credit rater said state and local governments will continue to benefit from savings tied to fewer weed-related arrests and incarcerations.
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