Buzz Kill: Why NJ Marijuana Taxes May Not be Enough
A new report finds while sin taxes are beneficial for the Garden State, they are not the answer to New Jersey’s budget woes.
“About 4.8 percent of New Jersey’s total revenues come from taxes on tobacco, alcohol and gambling,” said Mary Murphy, project director of the Pew Charitable Trusts.
That adds up to about $2 billion a year.
She said sin tax money is certainly helpful but “the fiscal challenges that New Jersey and other U.S. states are facing certainly go beyond the scope of just looking at the revenue streams that we’re discussing in this report on sin taxes.”
The Pew report finds 12 percent of Nevada’s state revenue is generated through sin taxes, the highest percentage in the nation, while the lowest is 0.7 percent in North Dakota.
She noted the Garden State is facing serous budget challenges “in terms of constrained revenue growth and limited fiscal flexibility while also trying to manage high fixed costs and significant legacy costs including an under-funded pension system.”
What happens if recreational pot becomes legal in the Garden State? How much of a difference can that make?
She noted in the nine states where recreational marijuana is already legal, revenue growth has been pretty consistent. “But it’s still not a huge share of any state’s budget. It’s not going to be the silver bullet or magic pill that solves larger budget problems for any state.”
New Jersey state officials estimate legal weed will bring in around $300 million annually.
Murphy stressed sin taxes are a perfectly reasonable source of revenue but "you risk setting your budget up for failure.”