Commentary

Steve May: Marijuana tax revenues could fund universal basic income

Editor’s note: Steve May is a licensed independent clinical social worker specializing in addiction medicine, a member of the Vermont Coalition to Regulate Marijuana Advisory Board, and a member of the Richmond Selectboard. This was first published in Vermont Cannabis News on Aug. 2.

This opportunity only comes around once a generation. In the 1990s it was the tobacco settlement. State attorneys general negotiated a 50-state settlement with Big Tobacco for using deceptive business practices. What resulted was a windfall for state governments across the country. Ostensibly, that money was supposed to be reserved for public health programs, but governors and legislatures raided settlement funds to shore up shaky budgets in tough financial times. It turned into a piggy bank in many, many places.

On some level, it’s hard to blame lawmakers. New revenues are almost impossible to come by under most circumstances. Vermont has been suffering under the yoke of austerity budgets for almost a decade. Any new monies coming into state coffers must look like shiny new toys on Christmas morning. Everybody seems to have a plan for the tax revenues to be raised from the legal sale of cannabis in Vermont. Maybe that’s because most of us believe it is inevitable that marijuana will be available for sale sooner rather than later. This is further exacerbated by the sense of crisis created by budget shortfalls year after year.

With all due respect, this is the moment to think bigger. Certainly a portion of gross receipts from the sale of legal marijuana will need to be used to support challenges in public safety, including addressing drugged driving. Certainly there will be a need to increase treatment resources: rehab beds, halfway houses, counseling availability and the like. But, the overwhelming majority of the benefit of the green rush in Vermont ought to belong to Vermonters.

Marijuana is an important resource for Vermont. Today, in spite of the fact that both state and federal law still consider it to be illegal, cannabis is the state’s second largest cash crop. Further, Vermont cannabis is a global brand. State and federal law notwithstanding, cannabis consumers view locally grown herb very favorably. That is not likely to change. When Vermont cannabis does ultimately make its way to a legal market there is every reason to expect there will be more-than-sufficient demand.

Vermont should view the resource curve with respect to legal cannabis and plan accordingly. Historically, societies blessed with resources of one kind or another usually squander the opportunities coming from resource extraction. Countless examples can be found across the developing world. Nigeria and its oil and South Africa and its precious metals are but a couple of examples. Wealth is concentrated in the hands of a precious few well-connected elites, but the general public often sees little benefit.

In the 1990s around the same time we were putting the tobacco settlement in place, Norway unexpectedly found oil off its west coast. Norway, having seen what happens when resource windfall occurred in other places around the world, made a decision not to concentrate the wealth from this development in the hands of a chosen few. Instead of selling development rights, they kept control and leased them to oil companies and limited the percentage of ownership those companies could control. They also heavily taxed royalties from the sale of oil by these companies on the world market. The monies from royalties and the government’s portion of the sale were returned to a special fund where government was not allowed to touch the principal, and the interest payment was spun off to support a dividend payment to every Norwegian citizen. In the course of little more than two decades, every Norwegian has become a millionaire.

Dividend payments and a system like I am describing are more or less the way Alaska’s Permanent Fund works — creating an annual payment to every Alaskan from cradle to grave. This arrangement has a name: universal basic income. “Universal” because everyone gets it; “basic income” because it’s taxable income for citizens to apply as they see fit, in light of their own financial needs. It would be taxed exactly the same way earned income from investments would be.

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In the absence of a thoughtful plan, this opportunity will be squandered. It’s not that important things won’t get done with this money. Bridges might get built. Maybe a school prevention program even gets funded. But in the absence of intentionality and a plan, this moment will be no different than the tobacco settlement for policy makers in Montpelier. This bucket of money will simply become a part of the largess of state government. One more budget line used to fund pet projects or shore up a wobbly budget.

Leadership demands courage and vision in equal parts. This proposal is bold. It represents a break from how things are normally done under the golden dome in Montpelier. For middle-class Vermont families adopting a universal basic income would be nothing short of transformational. Taking revenues generated from the sale of Vermont cannabis and directing it to a fund, which would, in effect, act like an annuity, providing real wealth and building up over time, will dramatically change life for the better for every Vermonter. We continue to lurch from crisis to crisis, squeezing Vermont families to the breaking point. At a time when austerity has become reality and folks are routinely asked to do more with less, a universal basic income established to support every Vermonter as a result of revenues from cannabis sales across the state is nothing short of a game changer. This moment is too big for us to allow any kind of failure; the stakes are just too high.


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