Marijuana backers fault state's cost report UPDATE | Arkansas Blog

Friday, October 21, 2016

Marijuana backers fault state's cost report UPDATE

Posted By on Fri, Oct 21, 2016 at 3:36 PM

click to enlarge DAVID COUCH: Questions state estimates on cost of marijuana regulation. - BRIAN CHILSON
  • Brian Chilson
  • DAVID COUCH: Questions state estimates on cost of marijuana regulation.
David Couch, spokesman for the group backing the amendment,, Issue 6, to allow medical marijuana in Arkansas, has sent a  response to a state report issued this week on the impact of the measure.

As I noted before, the state report — relying on Finance and Administration, State Police and ABC estimates — says it would cost far more to regulate the amendment that it would produce in tax revenue — $2.4 million in revenue against $4 to $5.7 million in costs.

Couch has said previously that the amendment requires that it be revenue neutral. He's also scoffed at the figures cited in new expenses. Me, too. 20 new state troopers and 20 new Ram pickups for them, plus all kinds of support, because medical marijuana is legalized. How does legalizing a medical usage of a drug they already are nominally staffed up to investigate require such an additional need for police manpower?

In any case: Here again is the state report on the amendment (there's a separate one on the initiated act.)

Couch responded:

I’ve briefly looked at the DFA report and it is fundamentally flawed. If you look at the states that they use to calculate the average marijuana sales per capita they use only 6 of 25. Of these 6, Illinois and Nevada are new to the medical marijuana market and not even fully operable yet. They have Nevada at 0.93 per capita. Why did they leave out Arizona at $33.63 per capita? What about the other states that have medical marijuana?

It is also important to note that 4 of the 6 states they chose allow patients to grow their own marijuana. Issue 6 does not.

They also did not include any revenue generated by the application and license fees. They did however point out that with respect to Issue 6 that it is required to be revenue neutral and that General Assembly can impose additional taxes and/or reallocate the ones imposed in the amendment.

Also they also ignore all the other economic benefits of Issue 6. We are paying the Chinese at least $3.2 million to create 400 jobs here. The average worker will make $14 per hour. We are rebating the Chinese 65% of the property taxes that they pay. Issue 6 will create 800 jobs (for people who will pay income tax) and all of the property taxes will stay. The average dispensary employee makes $17 per hour.
Which reminds me: How was it that Gov. Asa Hutchinson could promise the Chinese company a 65 percent discount in local property taxes without votes of relevant governing bodies in Pulaski County first that assess the tax and approve these payment-in-lieu-of-tax deals on property benefitting from tax-advantaged bond issues. (I know, they'd all probably roll over anyway, and the biggest taxing agency in the county, the Little Rock School District, was taken over by the Hutchinson administration, but still.)

click to enlarge unnamed.png
UPDATE: Backers of Issue 7, the initiated act for medical marijuana, also have objected to the state report on their measure.

Arkansans for Compassionate Care (ACC) – the sponsors of the Arkansas Medical Cannabis Act, Issue 7 on this November’s ballot – condemns a recent report issued by the state Department of Finance and Administration (DFA) as inaccurate and misleading. The report is a political stunt seeking to curtail support for Issue 7, which would offer seriously ill Arkansans the opportunity to seek this treatment option with their physician’s authorization.

The DFA report estimates that implementation of a program under Issue 7 would annually cost the department between $635,000-$993,000. The DFA arrived at these numbers in part by estimating the need to hire 20 new law enforcement officers and purchase 20 Dodge Ram 2500 trucks. Yet the report gives no reason why these new expenses are needed. In truth, costs for law enforcement personnel go down when states implement medical marijuana programs, as police no longer need to target patients seeking relief from cannabis.

The report makes other absurd claims as well, again with no explanation. For instance, the report claims that Issue 7 would cost a combined total of $3,960 per year for nitrile and latex gloves, and $100,000 for self-contained breathing apparatuses, devices worn by firefighters to provide breathable air in life-threatening situations. It is difficult to imagine how Issue 7 has anything to do with these expenses, and the report provides no rationale for their inclusion as Issue 7-related costs.

Most state medical cannabis programs are cost-neutral or run at a surplus. Programs in Michigan, Oregon, and Arizona have brought in millions of dollars in surpluses. For a comparison of fiscal information for state programs please see

The Arkansas Medical Cannabis Act was drafted to be completely self-funded by levying a tax on medical cannabis. Nonprofit cannabis care centers established under the Act would be required to pay a license application fee of up to $5,000 and an annual renewal fee of $1,000. Patients would pay an application fee of up to $50, and testing labs application fees range up to $1,000. ACC believes these sums will more than cover the administrative costs of running the program, and may indeed lead to a surplus.

Ryan Denham who serves as Deputy Director for the Issue 7 stated, “This misleading report is a desperate attempt by a state agency whose head was appointed by Gov. Hutchinson, who previously led the D.E.A. and is currently leading the opposition to this patient-led effort. We hope voters are not misled by this intentionally deceptive report and will make the sensible and compassionate choice at the polls in November.”

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