A problem: America faces a pension crisis of fearsome proporations. To solve it, states need money, and fast. A possible solution? Legal marijuana—and the greened-out greenbacks it brings to state coffers.
That’s on the minds of cash-strapped state lawmakers, as they consider legalizing weed. In Illinois, where Chicago’s pension crisis will require nearly $1 billion in new annual retirement payments in the next four years, mayor Rahm Emanuel wants to send potential marijuana tax money straight to pension funds. In New Jersey, where pension and debt bills will likely consume a third of the budget by 2023, legal recreational marijuana could help to tip the balance.
Of course, there’s a way to go before either state offers weed-on-demand. Illinois’s forthcoming governor, J. B. Pritzker, is in favor of legalization, though the precise details of how that may happen, and when, are yet to be hashed out. Some advocates say legal joints could be less than 12 months away, though dissent among state lawmakers may ensure a rocky road en route. (Republicans, who largely oppose legalization, may be encouraged by a projected $525-million tax boost per annum.)
New Jersey is much closer to having those blunts in hand. Late last month, legislative committees approved bills to end prohibition. Some related criminal records will similarly be wiped. What lawmakers don’t necessarily agree on, however, is the sweet spot for taxation. At the moment, proposals set the rate at a low 14%. Governor Phil Murphy is advocating for a sales tax of 25%, below Washington state’s 37% and Colorado’s combined 30%, and in line with Nevada.
Whether any of these measures will be enough to solve the pensions crisis seems unlikely. In Illinois, Emanuel has a triple-action plan of attack to fill the city’s purse: marijuana taxes, a state constitutional amendment capping particular benefits, and revenue from a new casino. It’s only a small part of the puzzle—in Chicago alone, the casino and marijuana taxes will produce just $771 million over five years. The rest is yet to be filled in.
Credit:Â qz.com