Op-ed: Estimate of medical marijuana cost is way, way off

In 2015, Sen. Howard Stephenson and Rep. Steve Eliason introduced a bill (S.B. 60) to require high school students pass the Civics Naturalization Test all naturalized citizens must pass before becoming US citizens. The Utah Education Association hated this test and did everything they could, behind the scenes, to kill the bill.

The most brazen act was to get the State Office of Education to attach a fiscal note to the bill that amounted to over $700,000 (one-time costs of $421,750 and on-going costs of $281,200). After much argument, public shaming, and request for meaningful justification of these outlandish numbers, the fiscal note was reduced to under $35,000 – less than 5% of the over-inflated fiscal note that had the sole purchase of torpedoing the bill.

This exercise confirmed two long-held suspicions. 1) The government’s fiscal impact studies are, as best, suspect and rarely to be trusted. 2) Fiscal notes are highly influenced by peer and political pressures.

After the bill’s note was reduced, it passed, and there has never been any actual cost sheet released to grade the fiscal note that was reduced to 20 times below the original amount.

Fiscal notes are little more than best guesses and slick tools for politicians and bureaucrats to influence support. They will remain so until there is follow up, after-the-fact grading and consequences for poor analysis. Some smart legislator ought to introduce legislation requiring this.

Recently the Governor’s Office of Budget and Management (GOMB) released a fiscal impact amount for the proposed 2018 medical cannabis ballot initiative, similar to the process legislation goes through. The analysis is less than a page long, does not include any process details and the confusing language has lead to claims the law would cost the state $3 million. It won’t! And GOMB knows it.

The key point for voters to understand is that any supposed costs associated with establishing a medical cannabis system will be offset by fee collections within the program. In other words, the system will essentially pay for itself. The GOMB fiscal note ignores this basic fact.

The analysis estimates that costs will amount to $1.8 million annually, and fee revenue from patients and the businesses that serve them will cover nearly 80% of that, leaving only $400,000 a year to be picked up by the state.

But, that’s not the whole story. The initiative allows state agencies to determine the amount of each fee, providing for adjustments so the program can be revenue neutral.

Adding to the confusion, the official analysis mentions that “the state and local governments would forego $1,600,000” because medical cannabis, like other medications, would be exempt from sales tax. This tax money does not exist now, and would not exist anyway. You cannot lose something you do not have, and taxes patients will pay at purchase of cannabis will go back into the state’s medical cannabis fund to pay for ongoing costs.

Most medical cannabis programs in the country are either revenue neutral or net revenue generators. The proposed initiative was written to allow Utah’s medical cannabis program to fall into one of those categories.

It is unfortunate, but not surprising, that for purely political purposes some are grossly misrepresenting the fiscal impact of the proposed 2018 medical cannabis ballot initiative.

Rest assured fellow taxpayers, voting “yes” for medical cannabis will not make a dent in your – or the state’s – wallet.

Chuck Warren is managing director of September Group LLC and author of “Expanding the Tent.”