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Thursday, April 18, 2024

Down the drain: Money Wisconsin misses by keeping cannabis caged

Here’s how Wisconsin’s economy is losing out on the marijuana industry.

In early November, Dane County residents voted in favor of marijuana legalization in a non-binding referendum — for the third time in eight years.

Dane County residents aren’t alone. A Marquette Law School poll from October found 64% of Wisconsinites support legalization, continuing a six-year streak of broad support for marijuana legalization in Wisconsin.

Yet, marijuana remains criminalized in Wisconsin with no clear plan for legalization. Not only are Wisconsinites missing out on the marijuana market, but Wisconsin's economy lacks the benefits of an increasingly profitable industry, according to Democratic Gov. Tony Evers’ office. 

Evers has called for support of marijuana legalization and pro-medical legislation. His office estimates cannabis sales would generate $165 million in revenue in Wisconsin in the industry’s first year based on tax revenue data from bordering states with legal marijuana. 

Evers said he would reinvest tax revenue from legal marijuana into public schools in a press release last year.

“Legalizing and taxing marijuana in Wisconsin — just like we do already with alcohol — ensures a controlled market and safe product are available for both recreational and medicinal users and can open the door for countless opportunities for us to reinvest in our communities and create a more equitable state,” Evers said. 

Evers’ plan would require cooperation from Wisconsin Republicans, who control the Legislature. However, Republican support for legal marijuana is sparse.

Assembly Speaker Robin Vos (R-Rochester) told the Associated Press he supports medical marijuana legalization in 2019 but that the process is ”going to take a while.”

Vos has supported a limited legalization of medical marijuana available only in non-smokable forms for chronic medical conditions since then but continues to oppose legalizing recreational marijuana.

Senate Majority Leader Devin LeMahieu has said he doesn’t back legalization without FDA approval. 

“If the federal government delists it and it goes through FDA testing, then it should be treated like any other drug,” LeMahieu said at a WisPolitics luncheon in April 2021. “If there’s advantages to it, if it helps out people, I have no problem with it as long as a doctor’s prescribing it.”

“I think that discussion needs to be done at the federal level and not have some rogue state doing it without actual science behind it,” he added.

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The costs of prohibition

With marijuana illegal in Wisconsin, state residents satisfy their cannabis fix across state lines.

The drug is popular among young people nationwide despite still being criminalized. More than four in 10 young adults ages 19 to 30 used marijuana during the past 12 months, according to a 2021 study from the National Institute on Drug Abuse.  

That means neighboring states like Michigan, which legalized recreational marijuana use in 2019, are raking in the green from sales tax revenues.

Last year alone, Michigan recorded $1.3 billion in marijuana sales for recreational use and over $480 million for medical, according to Michigan's Cannabis Regulatory Agency.

Those sales generated more than $111 million in marijuana sales tax revenues during the 2021 fiscal year, according to the Michigan Treasury Department. Approximately $42 million of that money was redistributed to municipal governments in March 2022.

Some of that tax revenue comes from Wisconsinites who travel across state lines, including University of Wisconsin-Madison students. A Milwaukee Journal Sentinel article even described a Michigan dispensary parking lot filled with cars bearing Wisconsin license plates. 

“It’s honestly very beneficial since I can get medical marijuana,” said a UW student who wished to remain anonymous. “It's better for me and plus, it's way more efficient and safer instead of getting it off the street.”

Evers lamented about missed tax revenue from cannabis sales going to neighboring states in a Twitter video last year, where he recalled a conversation with Illinois Gov. J. B. Pritzker.

"We talk about this often because he's really glad that we have not legalized marijuana because the taxes that are made in Illinois from legal sales of marijuana helps them out a hell of a lot," Evers said.

Wisconsin would not only benefit from the tax revenue on marijuana, but if decriminalization laws are implemented, the state could save money on yearly arrests. 

Marijuana possession arrests accounted for 57% of all Wisconsin drug arrests in 2018, according to the American Civil Liberties Union (ACLU). Arrest rates are disproportionately high for Black residents, who are 4.2 times more likely than white residents to be arrested for marijuana possession in Wisconsin.

The ACLU also estimated Wisconsin taxpayers could save approximately $3.5 million if marijuana possession arrests were cut in half in a 2012 report. That number rises to nearly $4.5 million when adjusted for inflation using the U.S. Bureau of Labor Statistics’ inflation calculator.

The ACLU’s estimate does not include the costs of jailing the arrested or court costs for prosecuting and incarcerating arrests that lead to a jail or prison sentence.

As governor, Evers granted 603 pardons to people convicted of cannabis possession. But the Democratic governor told UW-Madison students in September that he was “really tired” of prohibition.

“We have to make sure that the use of marijuana is not something that gets you into the criminal justice system,” Evers said. ”We need to legalize it." 

The Delta-8 loophole 

Despite the lack of legalization, Wisconsin is not completely without marijuana products. Wisconsin legalized non-intoxicating cannabidiol, or CBD, products from the plant in 2017, and in late 2019, Gov. Evers signed a bipartisan law permitting Wisconsin growers to cultivate hemp

This loophole allows the selling of certain cannabis strains, namely Delta-8, in Wisconsin.

Knuckleheads, a store that sells Delta-8 products, has a location in downtown Madison. Knuckleheads employees believe their business success demonstrates Wisconsinites’ demand for marijuana products.

"The shop is highly profitable, and the health and wellness items are bestsellers, one employee said. “I definitely don’t think the shop would be the success that it is without a demand for marijuana in Wisconsin.”

Though their sales are legal, the employee remarked that FDA regulations would help make products safer. 

"We stock stuff from out of state, [coming] from a dispensary that's legal,” they said. “But legalization would mean regulations — a higher being and oversight. This would be an extra safety net for what people are using."

The employee added that some individuals turn to street vendors to get marijuana products, further increasing product safety concerns. Providing access to regulated marijuana subjected to safety standards could help mitigate some safety concerns held by those in the community, the employee said.

"What if they get a bad batch?" the employee said. They recalled an illegal THC cart scare a few years back and described it as "terrifying."  

A good place to start might be legalizing medical marijuana, which the Knuckleheads employee said would be "such a help," especially for people who struggle with mental illness and other physically-limiting conditions like arthritis. 

Medical marijuana is overwhelmingly popular among Wisconsinites. More than 80% support the idea of legalizing marijuana for medical purposes, according to 2019 Marquette University Law School polling.

Gov. Evers also voiced his support for medical marijuana in a 2019 tweet.

"For many Wisconsinites, things like medical marijuana or other products like CBD oil can help alleviate chronic pain from debilitating medical conditions, reduce symptoms for things like anxiety and even help folks cope with things like PTSD," Evers said.

Wisconsin remains an island in terms of legalization, with surrounding states such as Michigan, Illinois, Minnesota and Iowa all having legalized medical or recreational marijuana use. 

"Everybody around us has [legalized],” Evers said in a September roundtable discussion. “It's likely time that we can finally do that here in the state of Wisconsin." 

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Zoe Kukla

Zoe Kukla is a Graphics Editor, state news reporter, and photographer for The Daily Cardinal. Follow her on Twitter at @ZoeKukla.

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