Hawaii says they won’t raise enough tax revenue to cover the costs associated with a recreational cannabis market

Based on a recent agency report, the Hawaii State Internal Revenue Service estimates that legalizing cannabis for adult use would generate approximately $50 million in tax revenue annually, a significant increase from the $2.5 million in taxes on medical cannabis collected in the past financial year. However, the costs of legalizing recreational marijuana will not be recovered from the taxes collected, according to a state senator.

Isaac Choy, the state tax director, presented $2.557 million in tax revenue from medical marijuana sales, withholding taxes and corporate income taxes during a meeting of the Hawaii Task Force on Dual Use Marijuana from July 1, 2021 to June 30, 2022 – Dollars before Monday. The government organization also predicted that legalizing recreational marijuana would generate around $50 million in tax revenue.

In a live newscast, State Representative Ryan Yamane, who chairs the House Health and Human Services Committee, said the expected tax revenue would likely be insufficient to cover the regulatory costs associated with legalizing adult use of cannabis.

Yamane added that there aren’t many things that $50 million can buy. So there isn’t this huge profit that would be able to fund education or health services. Democratic lawmakers claimed that the sum would make it difficult to fund the infrastructure needed to provide control of a nationwide recreational cannabis market.

Yamane noted that using this to start a new program was a challenge. At $50 million a year, hiring, supervising and handling all the different facets of adult recreational use, he added.

THE MARIJUANA INDUSTRY DOES NOT AGREE WITH PROJECTIONS

However, representatives of Hawaii’s medicinal cannabis business disagree with the Treasury Department’s estimate that legalizing adult-use cannabis would bring the state about $50 million in tax revenue. Ty Cheng, president of Aloha Green Apothecary and chairman of the Hawaii Industry Cannabis Association, said tax revenue from the sale of recreational cannabis would certainly exceed state estimates.

The department’s estimates of around $200 million to $273 million in annual gross recreational cannabis sales have been challenged by Cheng because it’s unclear how much money visitors to the islands will spend on adult-use cannabis. He estimated that recreational marijuana sales would reach $400 million, which is comparable to the amount consumed for alcohol in Hawaii each year. If tax revenues increased at this rate, they would likely reach $80 million.

The cannabis market in Hawaii has plenty of room for expansion, according to Cheng. According to the state Department of Health and Human Services, 33,725 people had active medical marijuana cards at the end of September. Additionally, each business only has convenient access to a small percentage of the total number of patients, as there are only eight medicinal cannabis dispensaries scattered across the islands.

We actually only serve 8,000 to 9,000 patients, Cheng said. And those patient numbers have grown over the past three years, particularly during the pandemic, and revenue has doubled over the past two years.

EXAMINING THE LEGALIZATION OF CANNABIS IN HAWAII

The state Legislature and then-Democratic Gov. David Ige, who opposes recreational marijuana legalization, created the Dual Use of Marijuana Task Force last year to study opportunities for additional reform of Hawaii’s marijuana policy. In 2000, Hawaii legislators made the use of cannabis legal for medicinal purposes, becoming the first state to do so through legislation rather than a popular vote. But medical marijuana deals weren’t allowed until 2015.

Following next week’s general election, Cheng expressed optimism that fresh moves to legalize cannabis will be taken under the leadership of the new governor.

With President Biden’s recent pardon on federal drug charges, Cheng claimed that there is very optimistic sentiment about adult cannabis use at the moment.

According to Terilynne Gorman, a Maui resident and working group member, if the goal of legalizing marijuana is to make money, the taxes expected on medical marijuana and expected on recreational use of cannabis will fall short of what people expect procure. The estimated tax revenue doesn’t seem like a big jackpot for the state of Hawaii, in their opinion. It’s possible this isn’t the tax windfall people are hoping for.

Gorman went on to explain that a state lottery could be a lot more lucrative if the intention is to raise money for the treasury, but he added: I know we’re not here to talk about it.

The task committee is Hawaii’s biggest chance to legalize marijuana after years of unsuccessful attempts, according to Yamane. The commission is still collecting data and the state parliament will receive a report on it.

He said there were several opportunities for the public to get involved and testify for or against. However, he added that we really wanted to debunk certain myths and find out the truth.

Cannabis officials in Hawaii are hoping their state won’t lag behind after voters in five states decided whether to legalize cannabis in next week’s midterm elections.

Randy Gonce, director of the Hawaii Marijuana Industry Association, advised everyone to be vigilant and be prepared for feedback from the public. This is the longest legalization of marijuana in our state’s history, he said.

FINAL EFFECT

The state of Hawaii is close to legalizing recreational cannabis, but lawmakers claim that the potential tax revenue generated from legalizing adult use isn’t worth it because it won’t cover the costs of legalizing. However, major players in the state’s cannabis industry disagree with lawmakers, claiming that the volume to be generated will be higher than their estimates and that the adult cannabis purchase rate is in line with that of alcohol in the state.

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