- Study: Cannabis Bill Could Generate Millions in Louisiana Tax Revenue
Potential Revenue Exceeds $13 million
Baton Rouge, LA, March 1, 2016 – The Marijuana Policy Group (MPG) recently released a study that shows that as much as $13.36 million in annual revenue can be generated in Louisiana by levying a four percent sales and use tax on medical marijuana. The Louisiana legislature is currently formulating a bill for just such a tax.
The MPG study represents the latest and most comprehensive look at the potential impact of medical cannabis on Louisiana’s state budget. It examines potential tax revenue under three different scenarios, each with a low, median and high bound estimate.
The greatest revenue potential is realized when Louisiana allows medical marijuana to be prescribed for a wider range of medical conditions, as seen in the vast majority of states that have legalized marijuana for legitimate medical use. Under this assumption the MPG study estimates annual potential tax revenue of $8.16 million – $13.36 million.
According to Adam Orens, Partner at MPG, “Taxing medical marijuana in Louisiana has a significant upside in terms of revenue gains. By adopting the same limits on the conditions that are allowed to be treated by medical marijuana as those found in other states, Louisiana can create meaningful increases in tax receipts.”
A narrower range of medical conditions is also considered in the MPG study. This set of assumptions includes the three conditions that are currently allowed to be treated by medical marijuana in Louisiana and adds another nine common conditions, along with treatment for seizures and spams associated with six more conditions. Unlike the first scenario, this one eliminates the use of medical cannabis for chronic pain management. The result of this exclusion is a $3.4 – $4.7 million reduction in potential tax revenue.
Current Louisiana law limits medical marijuana to just three medical conditions — glaucoma, cancer patients receiving chemotherapy and those with spastic quadriplegia. This scenario results in the lowest tax revenue potential, according to the MPG study. Under present law, MPG estimates annual tax revenue of $0.5 – $0.6 million.
Jesse McCormick, spokesperson for the Louisiana Cannabis Association said, “Medical marijuana will dramatically improve the lives of many in Louisiana who suffer from debilitating illnesses. At a time in our state when we are raising taxes while cutting healthcare and higher education, implementing a tax on medical marijuana is an easy decision.”
Download a PDF of the study here: