One of the best arguments for legalizing cannabis has been the tax revenue states stand to earn. Aside from providing employment opportunities, a legal cannabis market can generate millions in tax revenue. And at a time like this when most businesses are shut down while the cannabis industry still soldiers on, that revenue would have been a lifesaver.
The governor of New Mexico recently said that she regretted the fact that the state hadn’t yet legalized recreational marijuana. In a press conference last week, Governor Michelle Lynn Lujan was asked how she planned to address the financial uncertainty caused by the coronavirus outbreak, and she said that although steps were being taken to handle it, she regretted losing cannabis as a source of revenue.
“If there was a time for wishful thinking, I wish we had passed recreational cannabis because that would be $100 million in tax revenue,” she says, acknowledging that the estimate was made before the outbreak.
“Nevertheless, a regulated marijuana market would be $100 million in the budget, and I’m very sad about that.”
Last year, she formed a working group to develop a legalization plan ahead of the January 2020 legislative session. The group estimated that the combined tax revenue from medical and recreational cannabis sales would be $100 annually, with sales reaching $620 million by the fifth year of legalization.
However, as the governor stated, the estimates were made before the coronavirus broke out. With most businesses shut down and stay at home orders in place, the economy is in shambles. On top of that, essential businesses like cannabis have to adhere to social distancing measures which would without a doubt affect sales. Consequently, the state would receive reduced tax revenue.
Additionally, a prior legalization bill that failed to pass stipulated that sales would begin on July 1. So even if it had been passed, the state wouldn’t have been able to collect the tax revenue.
The federal government deployed relief funds for small businesses, but since cannabis is still illegal at the federal level, marijuana businesses have been barred from accessing them. This has made it even harder for them to continue operating during the lockdown. However, a coalition of stakeholders and lawmakers are urging lawmakers to allow the state-legal cannabis industry to access the next coronavirus relief funds.
Governor Lujan had previously stated that she was open to letting voters decide on marijuana legalization through a ballot referendum. She also called for a special session but a spokesperson said that it is unlikely the reform will be pursued. Additionally, House Speaker Brian Egolf has stated that it is unlikely cannabis legalization will be part of a special session before the end of the year.
Analysts say the views expressed by Gov. Lujan show that what the cannabis industry players like Sugarmade Inc. (OTCQB: SGMD) have always said about the economic potential of marijuana is true for jurisdictions that legalize the industry.
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