Study Highlights: How Local Governments Spend Marijuana Tax Revenue
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A recent study by the Ohio State University’s Moritz College of Law sheds light on how local governments across the U.S. allocate marijuana tax revenue, revealing a focus on law enforcement, general funds, and parks and recreation, while health and education initiatives receive comparatively little support.
Key Findings from the Study
General Fund Use is Commonplace
60% of surveyed municipalities deposit cannabis tax revenue into general funds, using it as needed.
This practice varied by state, with 78% of Oregon municipalities reporting this approach, compared to 47% in Michigan.
Primary Spending Areas
The top uses of marijuana tax revenue include:
Law enforcement (widely supported in Oregon)
Parks and recreation
General infrastructure needs.
Fewer resources are directed toward health and education programs.
Revenue Scale
The majority of jurisdictions received $50,000 to $250,000 in marijuana tax revenue in the last fiscal year.
Divergence Between Officials and Residents
While officials favor allocating funds to general purposes or law enforcement, residents in some states, like New Jersey, have expressed preferences for investing in education and housing instead.
State-Specific Programs for Equity
Some states have implemented targeted initiatives:
California: Allocates significant cannabis tax revenue for community reinvestment, including equity programs and grants.
Illinois: Dedicates 25% of cannabis tax revenue to community reinvestment in areas harmed by the war on drugs through the Restore, Reinvest, Renew (R3) Program.
New York: Recently launched a $5 million grant program for community services such as mental health and housing in areas disproportionately affected by prior drug policies.
Ohio’s Status
Ohio legalized adult-use marijuana sales in August 2023, generating over $131 million in sales so far.
A 10% sales tax is in place, but municipalities are still in the early stages of determining how to allocate these funds.
Of the municipalities surveyed:
29% have discussed allocation plans.
Most indicated plans to use funds for general purposes or law enforcement.
The Bigger Picture
The study emphasizes the importance of transparent tracking and reporting of cannabis tax revenue spending to ensure alignment with community needs. While some states prioritize reinvestment in areas harmed by past drug policies, most municipalities focus on immediate fiscal needs, often at the expense of health and education programs.
Implications for Policy
As the cannabis industry continues to grow, researchers recommend that governments:
Collect detailed data on revenue allocation to improve accountability.
Engage residents to ensure spending aligns with community priorities.
Adopt equity-focused frameworks, as seen in states like Illinois and California, to address disparities caused by past cannabis prohibition policies.
This evolving landscape highlights both the potential and challenges of using cannabis tax revenue to serve public good.
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