In a Down Economy, Will Taxing Medical Marijuana Lead to a New Green Rush?

Medical marijuana proponents have long argued that taxing pot dispensaries could provide sizable revenue to local governments, ushering in a so-called “green rush.”

Though the profits are in fact relatively small, they are growing. And in a down economy in which states are struggling to balance budgets and debating which services to cut, they’re finding that “every bit helps” The New York Times reported today.

The article offers some hard numbers that illustrate the impact: Last year the state of Colorado collected $5 million from these taxes, double the amount it took the previous year, while Oregon generated $6.7 million, which helped to pay for other health programs in the state. As the Times notes, some of these profits go toward the cost of regulating and administering the medical marijuana industry. Still, the sizable revenues are motivating some cities and states to try to increase profit levels further by raising the tax rate and increasing the number of licensed dispensaries.

But a federal crackdown on medical marijuana launched under the Obama administration and particularly fierce in California, the country’s largest marijuana market, makes the green business risky: States are unsure whether the federal government will force dispensaries to close down.

In our July film, The Pot Republic, we went inside California’s attempts to regulate its booming medical marijuana industry — and the increasing pushback states are facing from federal officials.