July 10, 2021 News & Press Releases

ICYMI: Glenn Youngkin’s Lies About Marijuana Legalization Earn Three Pinocchios From The Washington Post

by Democratic Party of Virginia

Richmond, VA — This week, Virginians learned that Glenn Youngkin has been lying to them about his far-right agenda. Now, a new Washington Post fact check shows Youngkin’s lies extend beyond his extreme stance on abortion. While marijuana legalization has bipartisan support from Virginians across the commonwealth, Youngkin has tried to undermine it with false claims about its economic benefits.

Youngkin earned “Three Pinocchios” in a new Washington Post analysis for his baseless criticism of marijuana legalization policies that have, in fact, outperformed revenue projections in multiple states.

See below for key excerpts and read the full report here.

The Washington Post: Youngkin wrongly claims ‘every single state’ has earned disappointing cannabis revenue

By Glenn Kessler

“Do not count on the revenue from legalized marijuana to amount to anything. It hasn’t worked in Colorado, it hasn’t worked in California, it hasn’t worked in Oregon. This has been a false advertisement.”
— Glenn Youngkin, Virginia’s Republican gubernatorial candidate, in remarks at the Fredericksburg Virginia Patriots’ Governor’s Candidate Forum, Feb. 28

“The economic package that has been sold will wildly disappoint. Every single state that has adopted legalizing marijuana has been disappointed by the economic model.”
— Youngkin, remarks at a meet-and-greet event in Virginia Beach, March 15

“It just has fundamentally underperformed in every state where they have used this misguided justification for pressing forward with marijuana.”
— Youngkin, interview on WLNI’s “The Morningline,” May 14

On July 1, marijuana possession in small amounts became legal in Virginia, with government-regulated commercial sales of cannabis due to begin exactly three years later. It’s fair to say that Youngkin, the Republican nominee for governor, is not a fan of marijuana — he says he’s never known a habitual user to succeed in life — but his campaign recently denied a claim by Democratic rival Terry McAuliffe that he would seek to repeal legalization if he was elected governor. His campaign said that the former equity investor’s beef is that tax revenue projections “are way overstated, as they have shown to be in other states.”

Is that really the case? Youngkin’s quotes on the matter are from earlier this year, but they are still relevant in light of the recent dispute between the campaigns.

The Facts

In one set of remarks, Youngkin specifically mentioned three states — California, Oregon and Colorado — and in the other remarks Youngkin declared that “every single state” has fallen short on revenue projections. That’s a line that was echoed by his campaign.

Part of the problem with sweeping statements like this is that legalized marijuana has slowly gathered steam across the country. The first states that imposed taxes had less experience than the states that followed, which could apply the lessons learned. There is a fine balance between raising taxes high enough to generate substantial revenue but low enough so the already thriving illegal market is basically put out of business by the state competition.

California, which began legal sales in 2018, is one state that has had trouble getting the balance right. Its cannabis tax system is rather complicated, with a retail value tax levied at the wholesale level, and additional taxes added by localities. All told, the taxes were above 40 percent of the retail selling price, according to a 2020 Tax Foundation report. 

The result is that California had legal sales of $3.1 billion in 2019 — but the illicit market sales still made up about $8.7 billion, or almost three-quarters, of the market. In fact, California was forced to reduce its revenue estimates in 2018 and 2019. But since that slow start, legal sales have increased. In a May budget statement, Gov. Gavin Newsom (D) said the cannabis excise taxes had generated $491 million in 2019-2020, above earlier estimates. Revenue is now projected to reach $730 million in 2020-21 and $748 million in 2021-22. [...]

Two other states mentioned by Youngkin — Oregon and Colorado — did much better. Oregon, which began sales in 2015, exceeded its initial projections, according to the Tax Foundation, collecting $21 million in fiscal year 2016, $70 million in 2017, $82 million in 2018, $102 million in 2019 and $133 million in 2020.

Colorado, which created the first legal marijuana market in 2014, had a slow start but eventually outpaced the projections made by state forecasters. The state collected nearly $68 million in 2014 — and $387 million in 2020. [...]

Other states that have met or exceeded revenue projections include Illinois, Nevada and Washington. In Washington, for instance, “recreational marijuana generated approximately $70 million in tax revenue in the first year of sales — double the original revenue forecast,” Cato said. Alaska, the only state with a specific marijuana tax structure, initially did not meet revenue estimates when sales began in 2016, but in fiscal year 2019 it met its original projections as tax collections increased 10 times from fiscal year 2017 to fiscal year 2019. [...]

Youngkin’s comments “are certainly an overstatement. States have recovered non-trivial tax revenue,” said Jeffrey Miron, director of economic studies at the Cato Institute and a co-author of the institute’s report. [...]

The Pinocchio Test

Youngkin is pretty far off the mark here. He said marijuana sales have not worked in specific states such as Colorado, Oregon and California — and he wrongly claimed “every single state” had been disappointed in the economics of legal marijuana.

In reality, many states have exceeded their revenue projections for legal marijuana sales, even ones that face initial disappointment such as California. The money raised is not trivial, though adding to state coffers is not the prime motivator of legalization advocates in any case.

In other words, there have been occasional hiccups, but overall this is a success story for states that have embraced legalization. Youngkin earns Three Pinocchios.