Wisconsin’s cannabis market: Economic impact forecast

Introduction to Wisconsin's cannabis legalization proposal

Wisconsin's journey towards cannabis legalization has gained momentum with the introduction of Senate Bill 486. Spearheaded by a group of senators led by Sen. Leader Melissa Agard, this bill aims to legalize the possession, production, and sale of cannabis for both recreational and medical purposes. It also focuses on expunging past convictions related to marijuana and proposes equity grants. Despite its potential benefits, the bill faces challenges in a GOP-controlled legislature.

Projected economic impact and revenue estimates

The Wisconsin Department of Revenue, in its fiscal report, predicts substantial economic benefits from cannabis legalization. The report estimates that cannabis tax revenues could reach $170.5 million by the third year post-legalization. This projection includes $60.1 million from excise taxes, $64.9 million from retail taxes, and $41.7 million from state sales taxes. Local sales taxes and licensing fees are also expected to contribute significantly to the total revenue.

Breakdown of revenue sources

• Excise tax: $60.1 million annually by the third year.
• Retail tax: $64.9 million annually by the third year.
• State sales tax: $41.7 million annually by the third year.
• Local sales tax and fees: Additional revenue contributions.

Comparative analysis with neighboring states

To formulate these estimates, Wisconsin's Department of Revenue analyzed cannabis markets in neighboring states like Illinois and Michigan. These states have already seen significant economic benefits from cannabis legalization, providing a model for Wisconsin's potential trajectory. For instance, Illinois collected $36.1 million in tax revenue from Wisconsin residents crossing state lines for legal cannabis purchases, as reported by jsonline.com.

Administrative costs and ancillary benefits

While the bill forecasts significant revenue generation, it also acknowledges associated administrative costs, including an initial $4 million for implementing tax provisions and $4.5 million annually for staffing needs. Beyond direct tax revenue, legalization could lead to job creation in the cannabis industry and reduced costs related to law enforcement and incarceration for cannabis-related activities.

Key provisions of Senate Bill 486

Senate Bill 486 outlines several critical aspects of cannabis legalization in Wisconsin:

• Adults aged 21 and over can possess up to five ounces of cannabis and grow up to 12 plants.
• A 15% excise tax on marijuana producers and a 10% tax on retailers and lounges.
• Medical cannabis patients exempt from tax.
• 60% of tax revenue earmarked for a community reinvestment grant fund.
• Department of Revenue responsible for licensing cannabis businesses.
• Initiation of a medical marijuana registry for qualifying patients.
• State Department of Justice to review and potentially clear records for non-violent cannabis offenses.
• Employment protections for lawful marijuana users.

Public support and legislative hurdles

Public opinion in Wisconsin heavily favors legalization, with 64% of registered voters supporting it. However, the bill's advancement faces significant challenges due to opposition from Republican legislators. Despite this, the push for legalization continues, highlighting the potential economic benefits and addressing the moral imperatives of ending cannabis prohibition.