The legalization of marijuana for recreational purposes is a topic that has divided the United States in recent years. Though it has long been considered a dangerous substance, an increasing number of states are forming arguments for its legalization. Some states have successfully legalized the drug with legal and financial restrictions. Like alcohol, some states have imposed an age limit for the purchase and use of the drug. Furthermore, these states have imposed an excise tax on the drug. This excise tax is a major aspect of arguments in favor of legalization. These proponents argue that a new taxable product in the market will greatly benefit the economy, especially one such as marijuana where demand will certainly be high regardless of the price. Furthermore, they argue that money paid to illegal suppliers of the drug creates an …show more content…
An excise tax is a tax paid when purchasing a specific good. Often governments will impose high taxes on goods such as alcohol and tobacco because they wish to limit the sale of these good they have identified as dangerous. Colorado was one of the first states to legalize marijuana for recreational use. Along with this legalization, the government created an excise tax on the good. In order to analyze the success of the tax, data was collected on the total tax revenue from marijuana. As expected, marijuana created a fairly large source of revenue for the state. Based off data from the Colorado Department of Revenue, the state made almost $3,000,000 off of the excise tax in June of 2015 alone. Based off this data, it is clear that an excise tax on marijuana can provide a substantial amount of revenue for any state. A 2013 study published by the New York City Comptroller’s office suggested that tax revenue from a 20% excise tax could exceed $400 million. The model below depicts the impact of a tax on a