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Lawmakers Have Lots of Ideas For How to Spend Proceeds from Taxing Pot Sales

Haven Daley
Associated Press
A marijuana dispensary in San Francisco in April 2016.

When recreational marijuana is available for retail sale in Maine sometime next year, it will generate an estimated $12 million a year in tax revenue.

That’s not a whole lot of money in a yearly state budget that totals almost $3.5 billion. But it’s still $12 million, and there are many ideas for how to use that windfall emerging from the State House.

One bill would dedicate the money to health research. Another would use it to offset cuts in various public health programs. Rep. Dale Denno, a Democrat from Cumberland, wants to increase the 10 percent tax on marijuana sales to 15 percent as part of a package of taxes aimed at increasing state aid to local schools.

“Recreational marijuana tax as passed by the referendum is pretty low, so I thought we should bring it up to a more reasonable level,” he says.

Denno’s legislation would also raise the tax on tobacco products to help boost the state’s share of the cost of local schools up to 55 percent, and obviate the need for a 3 percent surcharge on household incomes over $200,000 approved by voters this past fall.

But the co-chair of the Legislature’s special committee on the implementation of legalization of marijuana, Republican Sen. Roger Katz of Augusta, says it’s way too early to start allocating the pot money.

“We have got to be very careful in, No. 1, how much we try to tax marijuana, because the higher the tax the more incentive for people to go to the black market where there is no tax,” he says.

Katz says tax strategy is just one issue the special committee will tackle as it crafts legislation to set up the regulatory framework for the sale of recreational marijuana. He would like to see the regulatory costs paid for by fees charged to the retailers, so that the tax revenue is all available to the state.

Democratic Rep. Drew Gattine of Westbrook, who co-chairs the Appropriations Committee, says there is no shortage of ideas about how to spend that new tax revenue.

“It’s good that when people are putting bills in that they are trying to think about ways of get them funded, because that is always a challenge. But at the end of the day, we just don’t really know. I think we are a long ways from figuring out what the path is,” he says.

Gattine says some would like to have the marijuana revenues go into the general fund to support a broad array of services. And some suggest that in light of all the uncertainty in Washington, that money should be set aside to Mitigate any future federal budget cuts.

And then there is Tony Donovan of the Sierra Club.

“The new tax revenues that are expected from the sale of recreational marijuana we see as an opportunity to fund an investment in passenger rail as a way of supporting freight transportation particularly for the agricultural industry,” he says.

Katz says he has also seen proposals that would use the money to offset cuts in programs in the two-year budget now being negotiated. He says it’s important to remember that it will take some time to generate any tax revenue from marijuana sales in Maine.

“We won’t be collecting any tax dollars and be able to spend any for at least a year or more. So anybody that is looking to it as a source of funding for this year, it just isn’t going to happen,” he says.

Katz expects there will be more ideas for how to use the money, particularly in the second session of the Legislature next January, when many of the lingering questions about taxing the new product will have been answered.

Journalist Mal Leary spearheads Maine Public's news coverage of politics and government and is based at the State House.