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US: Congress estimates revenue of $13,7 billion if cannabis is federally decriminalized

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Photo: DR | Doeren Mayhew

Um report published by the Congressional Budget Office (Congressional Budget Office) of the United States of America (USA) provides that the federal decriminalization of cannabis could generate around US$13,7 billion in net income over the next decade. On the other hand, nearly a billion dollars in federal prison costs can be saved if the MORE Act be approved by the Senate.

The US House of Representatives voted this month federally decriminalize cannabis by passing the MORE Act (Marijuana Opportunity Reinvestment and Expungement Act), a Reinvestment, Opportunities and Purge of Cannabis project, but the proposal will only go ahead if it passes the plenary vote of the Senate, which is expected to be something difficult.

However, the Congressional Budget Office (CBO) made an estimate of the possible gains that could come from the passage of HR 3884 (the MORE Act) and attests that federal decriminalization would increase US revenues by about 13,7 billion dollars, in the period from 2021 to 2030, in
business revenue creation, compliance and taxes. “These increases would be partially offset by allowing deductions for business expenses associated with trafficking in controlled substances,” it reads. in the document.

Release of prisoners and elimination of criminal records would save nearly a billion

Another important fact is that decriminalization would eliminate the records of people convicted of federal cannabis-related crimes and would require the release of thousands of inmates, reducing them by about 73 people a year, between current and future inmates. The CBO analysis considers that the law would reduce the Department of Prisons' costs of housing inmates by reducing the number of inmates in federal facilities, which could represent a billion-dollar savings over the period 2021-2030.

Richard DeLisi served 31 years in prison for a 90-year sentence for a non-violent cannabis-related crime. He was released from a Florida prison in 2020, aged 71.

Most of the new funds – around eight billion – would come from trade taxes on the legal cannabis industry, such as sales and consumption taxes. A separate excise tax, initially based on the price of cannabis products, is also estimated to generate another 5,7 billion.

The 5,7 billion in expected revenue from the cannabis excise tax would go to the so-called Opportunity Trust Fund. Of that amount, about $3 billion would be spent by the Department of Justice over a 10-year period to provide job training, legal assistance and other services to communities affected by the drug war. The remaining 2,7 billion would go to the Small Business Administration, to be used in state and local grants, for small cannabis-related businesses that help develop licensing rules.

Legalization would also bring additional costs to the government, the CBO report says, although all expenditures would be fully offset by new revenues. The expected reduction in the number of inmates at the federal level, for example, would lead to government spending of about $636 million on federal benefit programs such as Medicare and Medicaid.

“Federal prisoners are generally not entitled to these benefits,” the report says. "By reducing the prison population, the CBO estimates, HR 3884 would increase the number of federal beneficiaries, compared with current law, by increasing direct spending on federal benefit programs."

Under the proposal, the excise tax would initially start at 5% of the cost of a product, increase over time to 8%, and later change to a weight-based tax.

While the MORE Bill faces an uphill battle in the Senate — some see the issue as an impediment unless Democrats gain control of the house — legalization advocates applauded the bill's passage in the House of Representatives as a major milestone.

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