Pubdate: Fri, 02 Oct 2015
Source: Cincinnati Enquirer (OH)
Copyright: 2015 The Cincinnati Enquirer
Author: Anne Saker


The State Estimates Far Less in Tax Revenue Than Responsibleohio, but 
It Adds a Lot of Ifs About Its Own Calculations

The state issued a rough estimate Friday of how much tax revenue a 
legal marijuana market in Ohio would raise, predicting that a full 
year of operation could bring in between $133 million and $293.3 million.

Those figures are far lower than the $553 million estimated by 
ResponsibleOhio, the private investor group backing the legalization 
initiative, called Issue 3.

But the state report, dated Oct. 2, said its own calculations arise 
"from the fact that there is significant uncertainty about several 
features of the newly created legal market."

The report was produced by Timothy S. Keen, director of the Office of 
Budget and Management and State Tax Commissioner Joseph W. Testa. The 
report was quietly published Friday afternoon on the website of 
Secretary of State Jon Husted.

If voters pass Issue 3, the proposed constitutional amendment would 
create a regulatory and tax agency called the Marijuana Control 
Commission, which would run the industry. Growing the commercial crop 
would be limited to 10 farms around Ohio, three of which would be in 
Hamilton, Butler and Clermont counties.

The Keen-Testa report said that to reach its estimates, it assumed 
there would be some vertical integration among the grow sites, the 
testing-processing facilities and the retail stores that would sell 
the product.

While nothing in Issue 3 forbids vertical integration, officials with 
ResponsibleOhio have said that the 10 growers will be too busy trying 
to produce enough marijuana to get involved in the other aspects of 
the industry, at least at first.

The state report also assumed that legalization would not fully quash 
the black market. The report concluded that if there is vertical 
integration and a still-vigorous black market after legalization, the 
tax revenue would be at $133 million a year; if the industry remains 
independent at all levels and legalization reduces the black market, 
the tax revenue would be as high as $293.3 million.

But the report did not peg a year by which the numbers would be 
realized; it simply calculated the estimate for "a full year" of operation.

In June, a task force formed by ResponsibleOhio and led by Hamilton 
County Prosecutor Joe Deters said tax revenue could be as high as 
$553 million by 2020. That report assumed no vertical integration and 
a major reduction in the black market.

Issue 3 would require that eighty-five percent of all tax revenue 
raised through the legal marijuana industry would go to counties, 
cities and towns. The balance would pay for the operation of the 
Marijuana Control Commission.

Ian James, executive director of ResponsibleOhio, scoffed at the state report.

"Even under the state's wildly pessimistic projection, that is 
inconsistent with the federal government's usage data for the state 
of Ohio. State politicians estimate nearly $300 million a year in new 
revenue without raising taxes. That's still $300 million more to our 
communities than in previous years. But had the state utilized the 
federal usage data, they would have found our projection of $554 
million a year to be accurate.

"Of course, these are the same bureaucrats that told local 
governments they have no money for them. Yet at the end of the year, 
the state ended with a $2 billion surplus and starved local 
communities of funds, while fueling the jets of the state 
politicians' flights of fancy."

The Keen-Testa report guessed that the cost of running the Marijuana 
Control Commission would be about $17.7 million a year, which is less 
than 15 percent of the report's low-end estimate of tax revenues.
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MAP posted-by: Jay Bergstrom