Carroll County Faces Blunt Reality as Legalized Cannabis Leaves Taxpayers in a Hazy Financial Situation
July 1, 2023 marked a historic day for Maryland as the state embraced legalized recreational cannabis. With nearly 60% of county residents voting in favor of the constitutional amendment, Carroll County joined the green wave of change. However, as the smoke begins to clear, concerns over the financial implications for taxpayers have sparked.
Proponents of the amendment touted it as a potential cash cow for the state. Maryland witnessed an impressive $20.9 million in sales within the first week alone, and experts predict that the cannabis industry could generate billions of dollars for the state through a 9% tax on sales.
Yet, despite these promising numbers, measures passed by the General Assembly and signed into law by Governor Wes Moore in May have cast a cloud of uncertainty over the distribution of revenue. The control of funds rests firmly with the state, severely limiting how the money can be spent and leaving little for counties like Carroll.
The lion’s share of the revenue will flow directly into the coffers of the Maryland Cannabis Administration, the regulatory body responsible for enforcing state cannabis laws. Additionally, a newly formed entity called the “Office of Social Equity” will manage 35% of the revenue, directing funds towards communities that have been disproportionately affected by the war on drugs.
Unfortunately, Carroll County is projected to receive a meager allocation from the social equity fund. Distribution of funds to counties is based on the number of cannabis possession charges reported in each jurisdiction relative to charges across the state. Shockingly, in 2018, Carroll accounted for a mere 0.009% of arrests, leaving the county with limited financial support.
To make matters worse, a paltry 5% of state cannabis tax revenue will be allocated to local governments. For every $100 spent on cannabis, Carroll County can expect a meager 45 cents in return. Municipalities like Westminster will receive half of the local revenue share for transactions conducted within their boundaries.
This minuscule amount not only fails to cover the costs required to implement local policies, procedures, and regulations for legalized cannabis, but also falls short of addressing the financial challenges the county is poised to face with Maryland’s Education Blueprint and the recently established Fire/EMS department.
Moreover, the legalization of recreational cannabis is expected to drive up law enforcement expenses. A study conducted by the Journal of Studies of Alcohol and Drugs, analyzing data from 2009 to 2019, revealed that states that legalized marijuana and introduced a retail market experienced a 5.8% increase in injury crash rates and a 4.1% increase in fatal crash rates. In 2020 alone, alcohol-impaired drivers accounted for 30% of all traffic-related deaths in the United States, marking a 14.3% increase from the previous year, according to the Centers for Disease Control and Prevention.
Adding to the financial strain, the revenue from cannabis sales could potentially be further diminished by an increase in tax-exempt medical-use cards. These cards provide consumers with a loophole to purchase cannabis without being subject to taxes, creating a potential drain on revenue.
With the majority of Carroll County residents in favor of recreational marijuana and no option to opt-out, the county commissioners find themselves grappling with the implications of the new state law. As the smoke settles, they must navigate the challenges of balancing the desire for legalized cannabis with the financial realities faced by Carroll County taxpayers.