Bearing Drift: “However, with the passage of the legal adult use of cannabis last year, there is hope that Virginia can make up much of that deficit by legalizing the sale of cannabis to adults 21 years of age or older. The tax revenue for 2020-2022 which is estimated to be brought in solely by the Virginia Motor Vehicle Fuel Tax (commonly called the “gas tax”) is 2.159 billion dollars.
Annually, this works out to be a little over one billion dollars which the state collects every time someone is at the gas pump. These funds go into the Non-General Fund, which, in this case, is earmarked for things like transportation programs. Obviously, these funds are very important as the lifeblood of the Commonwealth is our road system. Removing or even reducing it without an alternative funding scheme would cause some havoc on the maintenance of our roads. An alternative funding scheme involving cannabis is a real political possibility that can help Mr. Youngkin keep his promises to the citizens of the Commonwealth.
In order to analyze and understand how legal cannabis sales can help Virginia, we must look at one of our sister states, Colorado. For those unaware, Colorado passed legal recreation sales for adult-use cannabis in 2012, with their legal sales beginning in 2015. Colorado decided to tax their cannabis sales at about 15 percent. In the six years since Colorado has legalized, they have brought in approximately $1.6 billion in tax revenue solely from cannabis sales.
Virginia’s legislation that was passed last year has a maximum tax of 24 percent on the sale of cannabis. Virginia also happens to have roughly two million more citizens within her borders. For the sake of simplicity within this analysis, I will assume that our legal sales will match Colorado’s annually.
However, even looking at the numbers with the increase in tax revenue, the Commonwealth could see a revenue of nearly 325 million dollars solely in taxes. These taxes, by the way, are not going into the state currently but rather in the hands of those individuals who choose to break the law.
While $325 million in annual revenue is about one third of the annual gas tax, it will likely go a long way to help fulfill Governor-elect Youngkin’s campaign promises if his administration wants it to do so.”