NYC RegulateMarijReport JohnLiu

7/27/2019 NYC RegulateMarijReport JohnLiu

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NewYorkCitYComptrollerJohN C. liu

AUGUST 2013

Regulating and Taxing

MARIJUANAThe Fiscal Impact on NYC


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New York City ComptrollerJohn C. Liu

REGULATE

MARIJUA

About the New York CityComptrollers OfceThe New York City Comptroller, an independentlyelected ofcial, is the Chie Financial Ofcer o

the City o New York. The mission o the ofceis to ensure the fnancial health o New York Cityby advising the Mayor, the City Council, andthe public o the Citys fnancial condition. TheComptroller also makes recommendations onCity programs and operations, fscal policies, andfnancial transactions. In addition, the Comptrollermanages the assets o the fve New York CityPension Funds, perorms budgetary analysis,keeps the Citys accounts, audits City agencies,manages the Citys debt issuance, and registersproposed contracts. His ofce employs a workorce

o more than 700 proessional sta members.These employees include accountants, attorneys,computer analysts, economists, engineers, budget,fnancial and investment analysts, claim specialists,and researchers, in addition to clerical andadministrative support sta.

About Regulate MarijuanaNYCRegulate Marijuana NYC advocates or regulatingand taxing the sale o marijuana or personal use oradults in New York City. It also calls or the creationo an interagency task orce comprised o thePolice Department, Administration or ChildrensServices, Department o Education, Department oHealth and Mental Hygiene, District Attorneys, andDepartment o Consumer Aairs to study issuesrelated to regulation and work collaboratively withthe New York State Senate and Assembly in orderto pass appropriate legislation.

Contents

1 Background

2 Potential Tax Revenues

3 Revenue Methodology

8 Potential Cost Savings

11 Conclusion

Regulatingand Taxing

MARIJUANAThe Fiscal Impacton NYC

August 2013

Published by the New York City

Comptrollers Oce

John C. LiuComptroller

First Deputy ComptrollerRicardo Morales

Deputy Comptrollerfor Public AffairsAri Honung

Chief Economist

Frank BraconiSpecial Assistant for

Public Affairs

Jacqueline S. Gold

Executive Director for Budget

Jonathan Rosenberg

Director of Policy

Carolyn Karo

Rachel Bardin

Doug Giuliano

Tomas HuntAndrew McWilliam

Susan Scheer


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REGULATING AND TAXING MARIJUANA: The Fiscal Impact on NYC AUGUST 201


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The New York City Comptrollers Oce estimated certain o the scal impacts that could be expected i marijuanuse in New York City was legalized and the production and sale o it was regulated and taxed. The ComptrollerOce estimates that such regulation and taxation would have a positive direct scal impact o roughly $431 millioannually through increased revenues and cost savings. The Comptrollers Oce did not attempt to quantiy the coso incarceration, which are largely borne by the state, or other secondary scal impacts o legalization, such as thpositive or negative eects on public health spending. Moreover, the Comptrollers Oce did not attempt to quantthe broader economic impacts o legalization, including the costs o lost time, work, and other opportunities currentimposed on those arrested.

BACKGROUND

Marijuana was criminalized in New York City in 1914 by the Board o Health, which added cannabis to the list o druprohibited by its Sanitary Code. New York State subsequently criminalized the possession or sale o marijuana oother than medical purposes in 1927.

Federal prohibition o the cultivation, distribution and possession o marijuana

began with the Controlled Substances Act (CSA) o 1970. Prior to that,prohibition relied upon state laws.

Since 1996, however, twenty states and the District o Columbia have, tovarying degrees, legalized marijuana or medical use. Another our stateshave pending legislation that would legalize medical marijuana, includingNew York. In June 2013, a New York State bill passed the State Assembly, butailed to come to a vote in the State Senate beore the end o session.

In 2012, Washington and Colorado became the rst states to legalizemarijuana or recreational use.

The extent to which the Controlled Substances Act trumps state laws legalizing

marijuana remains an unresolved legal question. As yet, U.S. Attorney General Eric Holder has not responded requests that he clariy the Federal Governments position on State laws legalizing marijuana, those o Washingto

and Colorado in particular, though he has shown interest in reducing sentences low-level drug oences.1

In New York State possessing marijuana in open view is a misdemeanor and aarrestable oense, but possessing small amounts (25 grams or less) privately isviolation, subject to nes. However, bringing small amounts o marijuana into thpublic view, or example during a stop and risk encounter, turns a violation intoclass B misdemeanor (PL 221.10). It has been estimated that in recent years ovtwo-thirds o people arrested or possession o small amounts o marijuana in Ne

York City displayed it at an ocers request.2

In 2011, Police Commissioner Raymond Kelly issued an Operations Order instructinpolice ocers that they may notcharge the individual with PL 221.10(1) CPM 5i the marihuana recovered was disclosed to public view at an ocers directionConsidering that directive, it is not clear why marijuana arrests continued at thhigh level o 39,230 in 2012 and are running at an annual rate o 37,000 in 2013.

1 Johnson, Carrie, With Holder in the Lead, Sentencing Reorm Gains Momentum, National Public Radio, August 7, 2013, http://www.npr.org/2013/08/07/209253516/with-holder-in-the-lead-sentencing-reorm-gains-momentum, accessed 8/8/2013.

2 Levine, Harry and Small, Deborah Peterson, Marijuana Arrest Crusade Racial Bias and Police Policy in New York City 1997-2007,New York Civil Liberties Union, April 2008, http://www.nyclu.org/fles/MARIJUANA-ARREST-CRUSADE_Final.pd.

3 New York State Division o Criminal Justice Services, Computerized Criminal History system. From January through the end o June,2013 there were 18,416 New York City misdemeanor marijuana arrests.

The vote on marijuana legalization Washington State.Source: regulatemarijuana.org

A logo rom the successulcampaign to legalize marijuanain Colorado.Source: regulatemarijuana.org


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Eective March 2013, Mayor Bloomberg issued a statement that ater being arrested or small amounts o marijuaanyone presenting an ID and clearing a warrant check will be released directly rom the precinct with a deappearance ticket to return to court.

Although survey data shows that whites use marijuana at rates roughly equal to or greater than other racial and ethngroups, 86 percent o those arrested in New York City under PL 221.10 in 2012 were black or Hispanic. Such arrescan have long-term adverse impacts on the ability to secure jobs, nd places to live, and obtain student loans.

RACIAL AND ETHNIC BREAKOUTS OF MARIJUANA USERS

VS. MARIJUANA ARRESTS IN NYC

Black

51.4%

Black

32.4%

Hispanic

34.8%

Hispanic

13.0%

White

11.2%

White

42.3%

Asian

2.6%

Asian

12.3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Arrests

Users

Sources: SAMHSA, Oce o Applied Studies, National Survey on Drug Use and Health, 2002; American CommunitySurvey 2011; and New York State Division o Criminal Justice Services.

POTENTIAL TAX REVENUES

The Comptrollers Oce estimates that the retail marijuana market in New York City is currently about $1.65 billioannually. O course, that activity is currently illicit and untaxed. We estimate that legalization, regulation, and taxatioo the marijuana market would expand the market to $1.7 billion, primarily by shiting some metropolitan arepurchases rom outside the City to within the City. A tax policy designed to hold the retail price constant wouproduce tax revenues o approximately $400 million in the intermediate term.4 The long-term tax revenue potentmay be signicantly greater, as the costs o supplying the market demand alls.

Our revenue estimates are based on an assumed 20 percent ad valorem excise tax plus existing State and City sal

taxes. The Citys total sales tax rate is currently 8.875 percent, o which 4.5 percentage points represents the Citysales tax levy and 4.0 percentage points represents the State share o the sales tax. The Metropolitan CommuteTransportation District (MCTD) receives the remaining 0.375 percentage point. As a result o this allocation o saltax revenue, our estimate o the $400 million revenue impact includes $331 million to the City, $63 million accruing the State, and $6 million allocated to the MCTD.

In our estimates, the excise tax is set at 20 percent in order to hold the retail price o marijuana roughly at its existinlevel. For a variety o reasons, it is expected that legal marijuana would rapidly drive undergroundmarket marijuana out o the marketplace even i the retail prices were comparable. It is urther assumed

4 Three to fve years ater legalization.


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that, as a matter o public policy, a goal o legalization would not be to lower the retail price. The Comptrollers Oestimates that a 20 percent excise tax, combined with existing sales taxes, would roughly oset the price decline thwould be expected ater legalization, leaving retail prices unchanged.

REVENUE METHODOLOGY

The task o estimating the scal impact o marijuana legalization in New York City is complicated by a lack o reliabdata. Because marijuana is an illicit drug, there is no regulatory body tracking sales volumes and overseeing qualitand no commercial market research monitoring prices and consumer behavior.

Our estimates o the size o the marijuana market consequently are based on more indirect and speculative methodState authorities in Washington5 and Colorado6 relied upon demand-side estimates o the marijuana market calculate the scal impacts o legalization. These state demand-side estimates utilized survey data on the requeno marijuana use combined with rough estimates o marijuana portion sizes to estimate total marijuana consumptioWe take a similar approach here.

Supply-side estimates iner the size o the marijuana market at the national level rom estimates o marijuana acreunder cultivation, or gross marijuana seizures by law enorcement.7 These methods are dicult to apply to New YoCity, but provide an additional point o reerence.

Based on the best available evidence, we estimate the potential size o the New York City marijuana market bcombining estimates o the number o New York City residents, commuters and visitors that use marijuana, the amouthey use on average, and average market prices.

900,000 NEW YORK CITY MARIJUANA CONSUMERS

According to the Census Bureau, there were roughly 6.5 million New York City residents in 2011 aged 18 or older. addition, there were about 900,000 commuters who work in the City but live outside it. Furthermore, about 600,00o those commuters are married or have a domestic partner. Because o the diculty o estimating the portioo commuter household consumption o marijuana that is currently purchased within the City, we consider thpopulation, in addition to the resident adult population, to constitute the primary market base or marijuana thwould be sold legally in New York City. We expect that i marijuana were to become legally available in New YoCity, regular commuters to the City and adult members o commuter households who use marijuana would shit thmajority o their purchases to legal outlets. In calculations o the market size both beore and ater legalization, wassume that the entirety o their purchases are made within the City.

Based on a recent report by the Substance Abuse and Mental Health Services Administration, we estimate that 10percent o New York, Northern New Jersey, and Long Island residents used marijuana in the past year, an incideno use which is lower than that o New York State (12.2 percent) and o the United States (10.7 percent). 8 We mano attempt to correct or survey respondents tendency to underreport their marijuana use, but note that such

correction would push our estimates o marijuana users, and our estimates o the size o the total market, higher.

Taking 10.4 percent o the population o 8.0 million New York City residents and commuter household adults yields aestimate o roughly 830,000 primary New York City marijuana consumers.

5 Ofce o Financial Management, Fiscal Impact Statement (I-502), August 10, 2012, http://www.liq.wa.gov/publications/Marijuana/I-502/502_fscal_impact.pd, accessed 8/7/2013.

6 Colorado Legislative Council Sta, Fiscal Impact Statement, September 18, 2012, http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=aplication%2Fpd&blobkey=id&blobtable=MungoBlobs&blobwhere=1251821710778&ssbinary=true, accessed on August 12, 2013.

7 Marijuana Production in the United States, Jon Gettman, The Bulletin o Cannabis Reorm, December 2006http://www.drugscience.org/Archive/bcr2/MJCropReport_2006.pd, accessed 8/7/2013.

8 SAMHSA, Center or Behavioral and Health Statistics and Quality, National Survey on Drug Use and Mental Heal, 2005 and 2006 to2010 (revised March 2012), New York-Northern New Jersey-Long Island MSA. http://www.samhsa.gov/data/NSDUHMetroBrieReports/NSDUH-Metro-New-York.pd, accessed 8/7/2013.


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I marijuana were sold legally, tourists would probably contribute to local marijuana demand more than they currently dWith approximately 90,000 hotel rooms in the City, an average occupancy rate o about 85 percent, and approximate1.5 adults per occupied hotel room, there are about 115,000 adult tourists and other overnight travelers in the City oa given day.9 Approximately hal o the overnight stays are made by domestic travelers, the other hal by internation

visitors. It can be assumed that the requency o marijuana use among domestic visitors to New York City is similar the national rate. Approximately hal o international visitors to New York City are rom Canada, Australia, or Europwhere marijuana consumption appears to be similar to or slightly less than in the U.S. The other hal mostly visit rocountries where marijuana use is signicantly less common. Based on these considerations, we estimate that overnigtravelers would add the equivalent o 10,000 resident marijuana consumers.

There are about 14.6 million people in the New York metropolitan area aged 18 or above. We estimate that adult NeYork City residents and adult members o commuter households total about 8.0 million, leaving approximately 6million who do not live in the City or live in a commuter household. Based on the consumption patterns discussed,can be estimated that 700,000 o them are marijuana users. It can be assumed that many o them would purchase legmarijuana on their occasional business or recreational visits to the City, or even make visits to the City specically that purpose. To account or this component o demand, we estimate, conservatively, that one-tenth o their marijuapurchases would be made in the City, adding the equivalent o 70,000 resident consumers.

Our demand estimates incorporate a post-legalization retail price only slightly below the current underground markprice, so we make no adjustments in the consumption gures based on price elasticity. However, it is probable thlegalization itsel will cause consumption to rise as criminal sanctions are removed, retail supply becomes more readavailable, and quality control and product consistency become established. We make no adjustment or this possibeect, thereby biasing downward our estimates o consumption and tax revenues.

0.56 OUNCE PER CAPITA CONSUMPTION

We assume the average marijuana user smokes 5 ounces o marijuana per year. This assumption is based on estimato average marijuana portion sizes and estimates o the requency o marijuana use. Estimates o typical marijuan

portion sizes range rom 0.5 grams (0.018 ounce) to 3 grams (0.11) ounce.10

Frequency o use aects users tolerance o marijuana, so daily recreational users or cancer patients may becomaccustomed to larger portion sizes in order to achieve the desired eects. By one estimate roughly 1 percent o thU.S. population uses marijuana more than 300 days a year.11 Applying this estimate to New York City would improughly 90,000 daily marijuana users in New York City, each o whom would smoke somewhere in the neighborhooo 1 kilogram (35 ounces) o marijuana annually (300+ days x 3 grams/day).

Our assumed average o 5 ounces o marijuana used per user per year represents an average o heavy users anmany others who may only smoke several times per year.12 Survey data suggest the median marijuana user in the U.smokes between 25 and 51 times per year.13 Our assumption o 5 ounces per user per year lies in between the dause estimates incorporated into the Washington and Colorado scal impact analyses.

It is worth noting that these crude estimates o ounces used per year ignore variability in the potency o marijuanused. This is akin to measuring total sales o alcoholic beverages in ounces without being able to distinguish an ouno beer rom an ounce o whiskey.

9 Many overnight visitors to the City stay with riends or amily, or as boarders in private homes and apartments. We assign their marijuana consumption, any, to the annual consumption total o the host residents.

10 Bulletin on Narcotics, Volume LVIII, Nos. 1 and 2, 2006, Review of the World Cannabis Situation, United Nations Ofce on Drugs and Crime, p. 43.11 The National Survey on Drug Use and Health, Daily Marijuana Users, November 24, 2004, http://www.samhsa.gov/data/2k4/DailyMJ/DailyMJ.pd,

accessed 8/8/2013.12 Detailed picture o user requency is available here: Bulletin on Narcotics, Volume LVIII, Nos. 1 and 2, 2006, Review of the World

Cannabis Situation, United Nations Ofce on Drugs and Crime, p. 48.13 Ibid, Table X, p. 48


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Distributed over the relevant adult population (including commuter households and tourists and metropolitan nocommuter resident equivalents), our use estimates imply an annual adult per capita consumption o 0.56 ounces. Bcomparison, in its Fiscal Impact Statement o Amendment 64, the Colorado Legislative Council Sta used a wide rango consumption estimates, the midpoint o which implied adult per capita consumption o 0.42 ounces. Washington

estimates o the scal impact o Initiative 502 utilized an implied annual per capita consumption gure o 0.57 ounceA careul study o Australias consumption, a country in which survey data indicates marijuana use is very similar to thin the United States, estimated adult per capita consumption at 0.64 ounces annually.14

Supply-based approaches to estimating marijuana consumption generally produce much higher estimates. Fexample, a Marijuana Availability Working Group organized under the auspices o The Library o Congress arrived a supply-based estimate o total U.S. consumption o 10,000 to 24,000 metric tons annually. 15 Given that New YoCity resident adults and commuter household adults, as estimated here, represent about 3.1 percent o all Americaaged 18 and above, the Library o Congress gure implies per capita consumption two to three times greater thathat used in this analysis.

NEW YORK CITY MARIJUANA PRICES, $400 PER OUNCE

We estimate the average retail price o marijuana in New York City at roughly $400/ounce in 2013. This estimatis based on price quotes or dierent brands o marijuana taken rom the High Times Price Index,16 an index price quotes o marijuana strains listed geographically. Six New York City-specic price quotes were available in odierent months o 2013; a simple average o them yields an estimated market price o roughly $400/ounce.

2013 NEW YORK CITY MARIJUANA PRICE QUOTES

Month Brand Price/Ounce ($)

February Strawberry Cough 420

March Strawberry Cough 400

Burmese Cush 350

April Guava Chem 450

Strawberry Cough 400

July Guava Chem 420

AVERAGE PRICE 407

We have no satisactory way o conrming these price quotes. In general, quoted prices appear to be higher in NeYork City than in other parts o the country. I accurate, it may refect the higher incomes o New York City consume

higher costs o doing business in the City, or supply constraints. Unlike other cities, we ound no New York City-speciprice quotes or lower grades o marijuana. I New York City users o lower quality marijuana are less likely to providprice quotes, this estimate will overstate the average market price.

14 Kenneth W. Clements and Mert Daryal: The Economics of Marijuana Consumption. Economic Research Centre, Department o Economics,The University o Western Australia, 1999.

15 Marijuana Availability In The United States And Its Associated Territories, Federal Research Division, Library o Congress, 2003.16 Hughes, Mike, Pot Prices June 2013 THMQ High Times, July 3, 2013, http://www.hightimes.com/read/pot-prices-june-2013-thmq,

accessed 8/8/2013.


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MARKET SIZE

Based on our estimates o the size o the relevant consuming population and their consumption patterns, weestimate total potential purchases o legal marijuana sold in New York City at 4.5 million ounces annually. At

an average retail price o close to $400 per ounce, the retail dollar size o the legal marijuana market would beroughly $1.7 billion annually.

We estimate that legalization would cause marijuana prices to all by roughly 30 percent during the initial years olegalization, implying a post-legalization pre-tax market size o approximately $1.3 billion. That price assumptionis based on a recent study that evaluated how marijuana prices changed in states that approved marijuanaor medical purposes.17 The study ound marijuana prices decreased in a range o 15 percent and 45 percentbetween the rst and th years ollowing legalization o medical marijuana.

Using this estimate to predict post-legalization price decreases in New York City may be problematic or a numbero reasons. State approval o marijuana or medical use likely has a muted impact on marijuana supply, andthereore marijuana prices, as compared to ull legalization. Full legalization would remove more legal barriers toproduction and distribution, and would likely lead to larger price decreases over time.

Data rom Colorado and Washington that might allow us to estimate the price impact o ull legalization is notyet available. Even i data were available, however, comparisons to those states would have to be made withcaution. Without ull legalization throughout New York State, all legalized marijuana sold in New York City wouldhave to be produced within its borders. Rough calculations based on known marijuana crop yields suggest thatwould be physically possible, but due to the Citys limited land area, most production would probably take placein high-cost indoor arms, limiting the price declines. A more plausible scenario is that legalization o marijuanain New York City takes place as a precursor o legalization throughout the State, ultimately leading to much lesscostly production methods and much lower wholesale prices.

17 D. Mark Andersen, Medical Marijuana Laws, Trafc Fatalities, and Alcohol Consumption, orthcoming in the Journal of Law andEconomics, http://dmarkanderson.com/Medical_Marijuana_Accidents_and_Alcohol_10_16_12_v1.pd, accessed 8/8/2013.


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TAX REVENUE

We assume a 20 percent excise tax on marijuana which, together with existing New York City sales taxes, would generaroughly $400 million in tax revenue annually. We derive this estimate based on a 20 percent retail excise tax (or

wholesale equivalent) on marijuana applied to a post-legalization market size o roughly $1.3 billion generating rough$260 million annually. Applying New York Citys sales tax o 8.875 percent to the $1.56 billion post-excise tax mark($1.3 billion + $260 million) yields roughly $140 million in sales tax to be shared between New York City, New York Statand the Metropolitan Transportation Authority.

COMPONENTS OF MARIJUANA TAX

MarijuanaExciseTax

(20%)

CitySalesTax

(4.5%)

StateSalesTax

(4.0%)

MTASurcharge

(0.375%)

The post-legalization time horizon over which revenue might materialize would depend on how quickly marijuandistribution reorganizes itsel through legal channels. The appropriate rate o taxation also depends on the elastico the marijuana supply over time. In the long run, i legal reorm allows marijuana to be grown on industrial scalegrowing costs and market prices are likely to all much more than assumed here. A dramatic all in wholesale marijuaprices would allow or a larger raction o the market price to be captured as tax revenue, while leaving the retail priunchanged.

Nearly all scenarios in which the sale o marijuana would be legalized in New York City involve either subsequelegalization throughout the state, or a greater participation o the state in the revenue stream than is assumein this analysis. We do not believe those scenarios necessarily imply a smaller scal benet or New York Cit

providing that cultivation o marijuana be legalized statewide. Allowing marijuana to be grown in less urbanizeareas o the State would acilitate lower cost production, drive prices down, and make room or additional taxes the State and/or City level.


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POTENTIAL COST SAVINGS

The Comptrollers Oce estimates that legalization would save New York City roughly $31 million annually by reducin

the number o arrests or marijuana-related oenses. We derive this estimate as the product o the number o NeYork City misdemeanor marijuana arrests and the cost per arrest.

NUMBER OF ARRESTS

According to the New York State Division o Criminal Justice Services there were 18,416 misdemeanor marijuanarrests in New York City in the rst six months o 2013 (January through June). I that pace o arrests continues througthe remainder o the year, there will be roughly 37,000 misdemeanor marijuana arrests in 2013. That would representslight decline rom the roughly 39,000 misdemeanor marijuana arrests in 2012. By comparison, in 2010 and 2011 thewere more than 50,000 misdemeanor marijuana arrests in New York City each year.18

Some raction o those arrested or misdemeanor marijuana possession were also arrested or other oenses at th

same time. The New York State Division o Criminal Justice Services was unable to provide data that would allow distinguish those arrested solely or marijuana possession rom those arrested or more than one oense. Howeveresearch suggests somewhere between 33 percent and 85 percent o those arrested or marijuana possession aarrested or that alone.19 Aggressive enorcement o drug laws is likely to lead to more marijuana arrests solely marijuana possession. We ollow the conservative assumption that 50 percent o those arrested or misdemeanmarijuana possession are arrested or more than one oence. By this assumption we estimate that legalizing marijuain New York City would avert roughly 18,500 misdemeanor arrests (50 percent o 37,000).

MARIJUANA POSSESSION ARRESTS BY ADMINISTRATION

0

10,000

20,000

30,000

40,000

50,000

60,000

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

KochDinkins

Giuliani

Bloomberg

Projected

Source: New York State Division o Criminal Justice Services.

18 New York State Division o Criminal Justice Services, Computerized Criminal History System.19 The Budgetary Implications o Marijuana Prohibition, June 2005, Jerey A. Miron

http://www.prohibitioncosts.org/wp-content/uploads/2012/04/MironReport.pd, accessed 8/8/2012.


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COST PER ARREST

We estimate the average misdemeanor marijuana arrest costs the City roughly $1,700. The costs o a marijuanaarrest include police time or taking arrestees to the police station, submitting seized marijuana into evidencengerprinting and photographing, perorming criminal background checks, and lling out associated paperwork

Judicial costs may include the time o prosecutors, public deenders, bailis, and other administrative work.

The American Civil Liberties Union provides a thorough review o dierent estimates o the costs o a marijuanaarrest.20 Perhaps the most widely cited estimate o the cost o a misdemeanor arrest comes rom a 2001 study bythe Washington State Institute or Public Policy. The study used expenditure and workload data or jurisdictionsin Washington State to estimate that each misdemeanor arrest cost $764 in police costs and $336 in judicial costsor a total o $1,100 per misdemeanor arrest.21 Updating the Washington gures to 2013 dollars but making noadjustment or the possibility that police costs in New York City may be dierent than in Washington State, we derivean estimate o $1,700 per misdemeanor marijuana arrest.

In Washington State roughly 70 percent o the total cost o a misdemeanor arrest was attributed to police costs and30 percent to judicial costs. Assuming those proportions hold approximately or New York City, it can be surmised

that roughly $1,200 o the estimated $1,700 cost o a misdemeanor marijuana arrest is attributable to police costs.

TOTAL COST SAVINGS

We estimate total cost savings rom marijuana legalization as the product o 18,500 misdemeanor arrests solely ormarijuana possession and an estimated $1,700 cost per arrest to derive a total estimated cost savings o roughly$31 million.

ANNUAL COST SAVINGS FROM ARRESTS

18,500marijuana-onlyarrests*

$1,700perarrest

$31+million

*2013 projection

20 The War on Marijuana in Black and White, Billions o Dollars Wasted on Racially Biased Arrests, American Civil Liberties Union, June2013, http://www.aclu.org/fles/assets/aclu-thewaronmarijuana-rel2.pd, accessed 8/8/2013.

21 The Comparative Costs and Benefts o Programs to Reduce Crime, Version 4.0, May 2001, Washington State Institute or PublicPolicy. http://www.wsipp.wa.gov/rptfles/costbeneft.pd, accessed 8/8/2013.


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CONCLUSION - TOTAL FISCAL IMPACT

We estimate the total scal impact o legalizing marijuana in New York City at roughly $431 million annually, the su

o roughly $400 million in tax revenues and roughly $31 million in averted misdemeanor arrests.

REGULATING AND TAXING MARIJUANA COULD CREATE APOSITIVE FISCAL ECONOMIC IMPACT.

Total: $431 million

NewYorkCity$362million

NewYorkState$63million

MTA$6million


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Comptroller of the City of New York1 Centre Street, New York, NY 10007

comptroller.nyc.gov

REGUL

ATE

MARIJUANAN

YC


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