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John Hazen White’s LOOKOUT: Legalizing Pot Will Not Fix RI Economy

Thursday, March 27, 2014

 

Rhode Island government is constantly in search of a new revenue scheme that will miraculously solve our financial problems – problems, of course, which are the result of the state’s continued inability to limit government spending and focus on real economic development. As the size of state government spending grows, while our tax base declines further, we grab at ill-considered and indeed reckless ideas, pipe dreams really, like casino gambling and video gaming.

So here we are in 2014 with our gambling dependency about to turn around and bite us, courtesy of Massachusetts, and the General Assembly debating whether to continue to pay off the 38 Studios debt or become something of a pariah in financial markets by shoving the debt at the moral obligation bond insurers and wiping our hands of it. But now there’s a new scheme at hand for more revenue.

Marijuana revenue scheme

The legislation to sell pot within our borders is being presented as the latest panacea: Voila! We can tax it and shuttle more dollars into state coffers. That legalizing marijuana has absolutely nothing to do with economic development, as did gambling before it, and is not a good idea for a whole lot of reasons, has little to do with the urge to develop a new tax revenue source. As departing Governor Chafee has stated about the prospect of marijuana taxes, now we might be able to fix our potholes!

I have no hesitation predicting that tax revenues from marijuana sales will not fix the dreadful, worsening state of our roads and bridges. Nor will it accomplish much in the way of jobs. Instead we’ll end up creating and spending more on government because of the problems legalizing marijuana will create for us. And lest any of us think that a marijuana tax revenue stream will be strong enough to really make a difference in our financial situation – like restoring a decent amount of the dollars we are going to start losing to Massachusetts (by this time next year), the March 14 GoLocalProv.com article, Legalized, Taxed Marijuana Would Generate .1% of RI Budget, certainly laid that hope to rest.

As the article explains, even taxing marijuana sales at 10% per ounce of the weed will only bring in an estimated $5 million a year. That amount is peanuts in an $8 billion budget. Legalizing marijuana for its tax revenue is a zero sum game at best and could have very negative consequences, both financial and social.

Sending the wrong message

Legalizing marijuana in Rhode Island will also send another negative signal about the state’s management and its direction, as in; These folks will do anything for a buck. What the national business raters, the investment community and businesses looking for location opportunities will take from such a development will be that Rhode Island keeps fiddling while the state fiscally collapses.

Marijuana use is a reality in our society and has been for a long time now; a majority of Americans when asked about legalization support the idea. As it is available and generally tolerated, it does more harm than good to punish people with jail time and education/career penalties for simple possession and use. Misusing it, especially in the workplace and in a host of situations where one has a direct responsibility for the safety of others, is a crucial public safety consideration. Legalization is a big step with potentially far reaching consequences. Former Congressman Kennedy’s viewpoint, formed from his own painful experiences and reflective of many others’, should be given full weight and deliberation. Do we really need to do this for $5 million a year?

Our state desperately needs jobs, so our most important priorities must be to cut government spending, stimulate the business environment and provide strong educational opportunities for our children, including career training. If we don’t focus on these things, it won’t matter how little or much we can get from gambling or marijuana taxation, because the state will go up in smoke anyway.

 

John Hazen White, Jr. is President and CEO of Taco, Inc. in Cranston and is the founder of Lookout RI.

 

Related Slideshow: Marijuana Use in the New England States

According to data collected by the Substance Abuse & Mental Health Services Administration, New Englanders are among the nation's top marijuana users in the country.  See how the indivdual states compare in the slides below:

Prev Next

6. Maine

Percent of respondents who used marijuana in the past year: 12.45%

National Rank: 13th most

Possession Laws: Decriminalized (2.5 ounces or less)

Prev Next

5. Connecticut

Percent of respondents who used marijuana in the past year: 12.50%

National Rank: 12th most

Possession Laws: Decriminalized (less than 0.5 ounce)

Prev Next

4. Massachusetts

Percent of respondents who used marijuana in the past year: 14.19%

National Rank: 5th most

Possession Laws: Decriminalized (1.0 ounce or less)

Prev Next

3. New Hampshire

Percent of respondents who used marijuana in the past year: 14.60%

National Rank: 4th most

Possession Laws: Medical Use Only

Prev Next

2. Rhode Island

Percent of respondents who used marijuana in the past year: 14.85%

National Rank: 3rd most

Possession Laws: Decriminalized (1.0 ounce or less)

Prev Next

1. Vermont

Percent of respondents who used marijuana in the past year: 14.90%

National Rank: 2nd most

Possession Laws: Decriminalized (1.0 ounce or less)

 
 

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Comments:

I agree, legalizing and taxing MJ won't bring in enough revenue to amount to much, considering the cost of the new bureaucracy to oversee it, staffed by goombas and brother-in-laws of the connected, but that's no reason to not legalize it. My neighbors, friends and I aren't bad people because we may choose to partake in the privacy our own homes and we shouldn't be arrested for anything so mundane.

If it was legal, we wouldn't have anymore 6 month or year long 'investigations', concentrating our police resources on other, more important things. That alone would save a bundle.

If your argument is that it can harm the user and the cost of rehab is too expensive, you should focus your energy on getting cigarettes and alcohol banned instead, REAL societal woes.

MJ is much ado about nothing.

Besides, according to some in our GA, once calamari is declared the Ocean States official appetizer, we're all going to be on 'easy street' anyway.

I like your columns John, even if I don't always agree with you.

Comment #1 by RI Taxpayer on 2014 03 27

I think the democrat's angle is two pronged. The much needed revenue to keep the machine running, and the need for more unionized state workers to run such a program. Hack hiring would be huge for something like this.

Comment #2 by David Beagle on 2014 03 27

legalization went out the door inside Rep Ajiello's pocketbook..banished by new Speaker

Comment #3 by frank bentley on 2014 03 27

RI Taxpayer--I agree with you that for responsible adults, MJ would be no problem. The challenge is responsible adults are few and far between.

Comment #4 by Jimmy LaRouche on 2014 03 27

I also think that the argument that rehab is too expensive fails to take into account that we also won't see people's lives ruined with criminal convictions for MJ on their record. That is an enormous, life long loss in productivity that we saddle part of the work force with. Employers just don't want to hire people with convictions, no matter what they were for. As mentioned earlier we will also see a more productive police force and savings on incarceration and the like. Besides, I would much rather see money spent on rehab than prohibition.

Comment #5 by Ted Geisel on 2014 03 27

Nobody said it's a magic bullet. But $5 million is nothing to sneeze at. It would also aid the tourism industry, make it harder for minors to obtain, and give business to ancillary companies (such as an analytical lab). Marijuana WILL be legalized within 5 years. The sooner we do it, the more revenue we will get, and the more business we can generate.

I thought Roger Williams said "To hold forth a lively experiment," not "Wait for Mass. to act first."

Kennedy is far from an academic, and admitted he has zero experience with marijuana. If he were talking about cocaine or Ambien, I might listen. He's even against decriminalization measures. The man has no connection to reality, because his lawyers were always able to get him out of trouble. He wants poor marijuana users to go to jail, while rich cokeheads (like himself) get off scot free..

You can rest easy. The corrupt house leadership will kill the bill.

Comment #6 by john jacks on 2014 03 27

And what's the right message for the GA to send? That we're stagnant? That the GA can't enact legislation a majority of Rhode Islanders support? That the GA cares more about lobbyists than citizens? That the GA can only focus on one thing at a time?

You can say the GA needs to focus on jobs, but that doesn't mean they'll actually create any. This is an opportunity for guaranteed revenue, jobs, *good* press and more. It would send the message that the legislature is serious about reform. Obviously with Tuesday's vote, they're not serious about reform.

Comment #7 by john jacks on 2014 03 27

Or we could just wait and see how it works out in CO and WA.

Comment #8 by Redd Ratt on 2014 03 27

Redd, How long do we wait? 5 years? 10 years? 20 years? We waited decades to see how prohibition works. It doesn't. We need to move on. CO and WA are already seeing pleasing tax revenue, and the sky hasn't fallen.

Comment #9 by john jacks on 2014 03 27

is the cost to society of having more citizens "doped up" really worth that tax money?

do we really need more distractions in our lives that do nothing to add to the quality of life?

and as Obama points out about the gap between haves and have nots, will this bring the have nots any closer to the haves for quality of life. do we really want the have nots to be spending money on pot instead of food clothing, shelter?

shameful--- the comments made by the progressives are almost surreal. do they have any idea what this country is all about and what it was built on?

ps.. it only passed in Colorado because of the influx of people from California that could not find jobs in California. so first they ruined California, now they ruin Colorado.

Comment #10 by john paycheck on 2014 03 27

Simmer down John Jacks, I'm for legalization. Don't let perfect be the enemy of good. I don't think legal pot is going to be an economic home run. It will bring some jobs and revenue to the state, but legalizing pot and making sandwiches are not the industries that will turn RI around.
We need to lower the overall business tax rates and regulatory thresholds to create a stable and predictable pro business climate. The speaker should introduce a 5 year plan to cut business taxes every year while matching the revenue cuts to spending cuts. Do not count on economic growth to replace the cuts to revenue. Let any revenue growth be put back into the budget after it is realized (don't spend it until you have it). Rhode Island is a tiny state that should have the best business climate on the east coast.

Comment #11 by Redd Ratt on 2014 03 27

No one is saying regulating marijuana like alcohol will be an economic panacea. We should end marijuana prohibition because it's a failed policy and reforming it is the right thing to do.

But regulating marijuana will also create hundreds of jobs in the state, and that's not something to brush off lightly as we have the highest unemployment rate in the country. Also, basing tax revenue projections for Rhode Island on the first month of CO's sales is misleading. As the regulators in CO will tell you, the first month is very low because the industry is still in it's ramp up period. Officials in CO still expect more than $100 million in extra tax revenue this year. Again, not something to brush off.

Comment #12 by Jared Moffat on 2014 03 27

Massachusetts will legalize it and RIers hard earned cash will go into their coffers. I haven't even smelled the stuff for 30 years but it's without a doubt less dangerous than alcohol.

Comment #13 by Jim D on 2014 03 27

food stamps for all, disability for anyone, obamaphones, programs for everyone.

smoke all the pot you want.

politicians vote for anything the people want and not what they need.

this country is headed in the wrong direction.

Comment #14 by john paycheck on 2014 03 27

Rather than chase revenue from drugs, how about we cut spending and clean house first. It makes me sick to see the direction this country is headed in! Most ever people on welfare, Obama phones, NO jobs, the IRS as a political entity. Now. Lets all just sit around and get high! yeah right...

Comment #15 by Dave McC on 2014 03 27

Maybe the State should make the tax on liquor and beer to 50% so the alcoholics pay their fair share of the damage that drunks do to society.

Oh wait then people would just drive over the border and buy it in MA or CT.

Comment #16 by Jim D on 2014 03 28

John Paycheck -

Agree. Completely. Legalizing pot is cheap sucker-bait for the naïve.

So doing will not solve existing problems. It will exacerbate them and create legions of easily foreseeable new ones.

As you say, CO legalization was the result of Californios who fled the mess they made of their state, only to get busy recreating it all over again.

Comment #17 by paul zecchino on 2014 03 28

Legalizing pot is the right thing to do - right now. Granted, the tax income is not a windfall.

However, there are MANY other benefits of legalization, such as:
1) stop ruining peoples lives with criminal records for pot,
2) free up law enforcement to chase real criminals,
3) likely reduce influence of drug cartels,
4) reduce prison populations and cost,
5) reduce court costs associated with prosecuting pot 'crimes',
etc, etc, etc.......

Comment #18 by Dave Johnson on 2014 03 28




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