Legalizing marijuana could bring windfall to state, if feds don’t object

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Medical Marijuana Ads Under Attack in Denver

The initiative to legalize, tax and regulate marijuana in Washington was estimated on Friday to raise up to $1.9 billion in new tax revenue over five years — or zero.

The wild swing, included in an analysis by the state Office of Financial Management, reflects broad uncertainty about the potential federal intervention in an initiative that would set up the nation’s first regulated market for recreational marijuana use.

The sky-high revenue estimate, which was previously disclosed in March, is based on an assumption that 363,000 customers in Washington would consume 187,000 pounds of marijuana in new state-license retail shops if Initiative 502 were approved in the Nov. 6 election.

If it does pass, I-502 would earmark $227 million a year of new marijuana taxes for the state’s basic health plan and $113 million a year for drug research, prevention and treatment.

Statewide administrative costs, covering such things as training police and licensing, would be more than $16 million a year.

But the fiscal analysis makes clear the “significant uncertainties related to federal enforcement of federal criminal laws” outlawing marijuana. The analysis says that federal law enforcement could possibly target state-licensed growers and retailers, which “may prevent the development of a functioning marijuana market.”

Attached to the analysis is a 2010 letter from U.S. Attorney General Eric Holder, sent as California voters were considering legalizing marijuana, vowing to “vigorously enforce the CSA (Controlled Substances Act) against those individuals and organizations that possess, manufacture and distribute marijuana for recreational use, even if such activities are permitted under state law.”

Alison Holcomb, campaign manager for I-502, said the federal response may depend on the margin of victory. She noted that the federal government has only sporadically intervened in the medical-marijuana industry, and usually only when operators appear to be abusing state law.

“Voters need to know that the federal government is giving us the room to show what we want to do,” she said.

This analysis tried to tally some costs and savings for legalized marijuana but lacked data to estimate savings from fewer drug prosecutions. In 2011, 9,308 charges were filed in local and superior courts statewide for possession of less than 40 grams, which would be legal under I-502.

A new DUI threshold for marijuana — a provision deeply unpopular with medical-marijuana patients — would likely raise nearly $4 million in fees from drivers charged under the provision.

On Friday, the state Official of Financial Management also released an analysis of Initiative 1240, which would allow the creation of charter schools. I-1240 would cost $3.1 million over five years, mostly to establish an application process, and to run an oversight commission.

The initiative would authorize as many as 40 charter schools, which are free, public, independent and can hire nonunion teachers. They would be funded the same way as traditional public schools, on a per-student basis.

Staff reporter Brian M. Rosenthal contributed to this report. Jonathan Martin: 206-464-2605 or[email protected].

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