Experts: Conn. missing out on marijuana revenue

Shown here is Joseph Palmieri Jr., founder of Envirogrow, which specializes in indoor pot-growing equipment. Storage containers are being used by some for grow room operations. Shown here is Joseph Palmieri Jr., founder of Envirogrow, which specializes in indoor pot-growing equipment. Storage containers are being used by some for grow room operations. Photo: Autumn Driscoll / Autumn Driscoll Photo: Autumn Driscoll / Autumn Driscoll Image 1 of / 9 Caption Close Experts: Conn. missing out on marijuana revenue 1 / 9 Back to Gallery

Connecticut could find itself a late arrival to the legalization party.

With more states looking at allowing marijuana for recreational use, some local experts are concerned that Connecticut will miss out on one of the fastest-growing industries in the country.

Vermont, Massachusetts and Rhode Island are moving closer to legalizing marijuana use without a doctor’s prescription, and the industry topped $5 billion last year. Bringing the cannabis trade out of the shadows has resulted in the creation of thousands of jobs and added billions of dollars into state and federal coffers.

“Within the past 60 days, the state of Colorado has collected more taxes from marijuana sales than from alcohol,” said Ed Keating, the co-founder of Cannabiz Media, a Killingworth-based company that provides data and research to the industry. “As a state, I believe we should take a hard look at that. From an economic standpoint, it’s very hard to ignore. And if more states around us legalize, the decision may very well be decided for us.”

Colorado, the first state to adopt legalized adult use, earns nearly $14 million a month in taxes from marijuana sales, according to a study by ArcView Market Research in California.

“The strong growth in demand for legal cannabis over the past two years is expected to continue in the years ahead,” states the executive summary of the report. “With nearly a dozen states debating changes to their cannabis laws in the coming year, 2016 will be the tipping point in which a majority of U.S. states transition from cannabis prohibition to some form of regulated legal markets.”

Within the next week, state senators in Vermont are expected to vote on legislation that would legalize recreational use there. Vermont Gov. Peter Shumlin has indicated his support for the legislation moving forward. Proposals are moving forward in other New England states this year, including Massachusetts and Rhode Island.

Economic impact

As Connecticut Gov. Dannel P. Malloy’s administration has repeatedly rejected calls for the legalization of marijuana for adult use, several lawmakers continue to pursue the legislation. State Rep. Juan Candelaria, D-New Haven, said he hopes to get a public hearing this year on legislation to legalize marijuana, adding he believes full legalization in Connecticut could result in as much as $55 million in additional tax revenue in the first year of the program.

“We need to listen to our constituents and, at the very least, have the conversation,” he said. “The economic impact of this new industry could be very significant to our state. It could help close the holes in our state budget while also having a positive impact on the state’s workforce.”

According to Keating, the producers and dispensers already operating under Connecticut’s medicinal marijuana program employ about 225 people, but that doesn’t include the many other businesses in the state that also support the industry.

Joseph Palmieri, founder of Bridgeport-based Envirogrow, which makes equipment for growing marijuana indoors, said he plans to add to his staff of eight to keep up with orders. With sales in the millions of dollars, Palmieri said the company is averaging about 20 to 30 percent revenue growth each month.

“Being an entrepreneur, I support full legalization,” he said. “It will put people back to work with high-paying jobs that you can use to support a family and build a life around. It would create literally thousands of jobs in Connecticut, and right now jobs is just about the only thing that we are exporting out of the state.”

Opiate alternative

Palmieri, who has an office in Colorado, has received orders from marijuana producers as far away as Australia and Guam in recent weeks.

“Legalizing marijuana in Connecticut for recreational purposes would turn the state’s economy around,” he said. “If not, we are going to miss the boat and lose out on this market.”

Angela D’Amico, of Trumbull, co-owner of the Compassionate Care Center in Bethel, said in addition to staffers who are licensed to work with medical marijuana, the dispensary employs a nutritionist, a yoga instructor and other professionals.

“We are also looking in the near future to bring a counselor on board,” she said, noting the majority of the dispensary’s clients suffer from chronic pain associated with nerve damage. “Many people with spinal cord injuries can become addicted to opiates. It can take as little as two to three weeks to become addicted. What we are offering is a wellness center with an alternative to that.”

But not everyone agrees legalization would be good for the state. There are social costs, including the potential for lost worker productivity and other issues that need to be considered, according to state Sen. Toni Boucher, R-Wilton.

“The costs that are involved in legalizing an illicit drug far outweigh any potential tax benefit,” said Boucher, who has long opposed legalization proposals. “The increased costs for drug treatment centers, additional law enforcement, lost productivity, not to mention the misery it would cause parents and teachers in the state’s school systems, would outweigh any of the potential benefits.”

Local economist Nick Perna said, with a multiplier effect, the impact to the state’s economy from legalizing recreational marijuana sales could be significant, but the social costs will need to be analyzed.

“There have been lots of studies on the lost productivity due to alcohol, but I’ve yet to see any studies on pot,” he said. “There is also the issue of how it will be regulated. I assume that the location of dispensaries would be regulated much like package stores. As a business, would I be happy to have a pot shop open next door, or would I be disturbed by it? I guess you could always open up a cafe next door and call it The Munchies.”