By: William Hutchins
The pension crisis in Kentucky has reached a breaking point. “In 2000, Kentucky’s public retirement plans were fully funded. Since then, they’ve accumulated nearly $43 billion in debts.”[1] The pension crisis was a keystone issue in Kentucky’s 2019 gubernatorial election and the controversy surrounding the issue brought thousands of Kentucky teachers to swarm to Frankfort in protest.[2] USA Today ranked Kentucky as having the worst pension crisis in the country with a funding ratio of 33.9%.[3] Something must be done to dig Kentucky out of the money pit it has fallen into. One of the biggest questions in Frankfort looms: where do we get the money from?
The solution has been sitting right under the state’s nose for years now: the legalization of both recreational and medical marijuana. In 2019, Colorado generated over $1.7 billion in marijuana sales.[4] To put that figure into perspective, the Kentucky bourbon industry generated $1.78 billion in 2019.[5] This means Colorado’s young marijuana industry made almost just as much as one of Kentucky’s largest, and oldest, industries. This demonstrates an untapped potential for a massive increase in tax revenue for a state that is desperately in need of funds. Right now, 60% of the price of every bourbon bottle goes to taxes or fees and 28% of every bourbon dollar goes to taxes.[6] If Kentucky made the same sales as Colorado and taxed at the rate of bourbon, Kentucky would have nearly $500 million in extra revenue per year. While this would not present an immediate solution, over the course of a decade, marijuana alone could potentially decrease the pension crisis by $5 billion. While these numbers are based on the assumption that Kentucky will sell the same amount of marijuana as Colorado, this assumption is not ill founded because when (not if) marijuana is finally legalized in Kentucky, the flood gates will open.
Tobacco and bourbon are economic powerhouses in Kentucky’s economy and pillars of tourism for the state. Kentucky and bourbon are practically synonymous. Due to Kentucky’s conducive climate, fertile soil, and culture that promotes marijuana, when legalized, Kentucky marijuana will rise to the prestige of its bourbon in both quality and popularity.[7] According to the Washington Post, marijuana in Kentucky grows so well that, “the plants got established so quickly that they shaded out the weeds.” [8] Kentucky marijuana can also yield significant amounts of the plant per acre and its use in the state dates back to the pioneer days.[9] This demonstrates that just as tobacco thrived in Kentucky, marijuana can too.
A 2020 poll revealed that support for medical marijuana in Kentucky is at 90% and support for marijuana under any circumstance is at 59%.[10] This has grown significantly since 2012, when only 78% of the state favored medical legalization and only 38% supported it for any purpose.[11] In less than ten years, support for full legalization of marijuana in Kentucky has nearly doubled, showing there is a massive untapped market in Kentucky.
I believe that this market potential is understated because the criminal market for marijuana can be difficult to measure. While still being illegal in the peak of the War on Drugs, Johnny Boone, the figurehead of the Cornbread Mafia led the creation of “the largest domestic marijuana syndicate in American history”, conspiring to grow and distribute thousands of plants.[12] The Cornbread Mafia had massive involvements in the Kentucky criminal market.[13] If an average joe and his buddies can create a hidden, multi-million dollar industry, in the middle of the War on Drugs, a legalized state market should certainly be able to perform at least that well. The demand and public support for marijuana has grown extensively in the past forty years, making Kentucky a ripe and untapped market.[14]
As of January 2020, neighboring state Illinois fully legalized marijuana.[15] Thus, Kentuckians over 21 years old can buy up to 15 grams (roughly $150) of marijuana one state over.[16] Recreational marijuana is taxed at 20-25% in Illinois, which is expected to generate $57 million dollars per year in revenue for the state.[17] Kentucky is currently watching its citizens take their hard-earned cash across the street to the state wise enough to see the plants potential while simultaneously drowning in debt. The solution here is clear. The data above demonstrates that not only does Kentucky have an ideal climate and soil for weed, but a large market too. The Kentucky legislature must step out of the way so that Kentucky can help fix its crippling debt, tobacco addiction, and its market going to other states. The people want and need this change. Kentuckians are ready to go green, to weed out poor economic decisions, and to smoke out their $43 billion debt.
[1] Tom Loftus, Kentucky is in a $43 Billion Pension Hole. Here are Some Reasons Why, Courier Journal (Dec. 17, 2018, 9:32 AM), https://www.courier-journal.com/story/news/politics/2018/12/17/kentucky-pension-crisis-reasons-how-we-got-here/2317233002/ [https://perma.cc/Z89K-GVQV].
[2] Kentucky Court Nixes Pension Law that Prompted Teacher Protests, NBC News (Dec. 13, 2018), https://www.nbcnews.com/news/us-news/kentucky-court-nixes-pension-law-prompted-teacher-protests-n947491 [https://perma.cc/SR7U-A8BH].
[3] Evan Comen, Is Your Money Safe? These States are Getting Hit Hardest by the Pension Crisis, USA Today (Oct. 15, 2019), https://www.usatoday.com/story/money/2019/10/15/every-states-pension-crisis-ranked/40302439/ [https://perma.cc/5SR2-26Q5].
[4] Marijuana Sales Report, Colorado Dep’t. of Rev. (Oct. 13, 2020), https://revenue.colorado.gov/data-and-reports/marijuana-data/marijuana-sales-reports [https://perma.cc/KQY7-ES3J].
[5] Brandon Roberts, Bourbon Continues to Be a Booming Business in Kentucky, Spectrum News (Sep. 15, 2020), https://spectrumnews1.com/ky/lexington/news/2020/09/15/bourbon-is-booming [https://perma.cc/A42U-4525].
[6] Bourbon Facts, Kentucky Distillers Ass’n. (Oct. 13, 2020), https://kybourbon.com/bourbon_culture-2/key_bourbon_facts/ [https://perma.cc/H3SB-ABL2].
[7] Bruce Schreiner, Kentucky’s Soil, Climate Make it Ideal for Hemp Comeback, The Washington Post (Aug. 16, 2014), https://www.washingtonpost.com/politics/kentuckys-soil-climate-make-it-ideal-for-hemp-comeback/2014/08/16/22b62c14-259a-11e4-8593-da634b334390_story.html [https://perma.cc/WFN3-254W].
[8] Id.
[9] Id.
[10] Kyle Jaeger, Majority of Kentucky Residents Back Legalizing Marijuana for Any Purpose, Poll Finds as Medical Hearing Approaches, Marijuana Moment (Feb. 6, 2020), https://www.marijuanamoment.net/majority-of-kentucky-residents-back-legalizing-marijuana-for-any-purpose-poll-finds-as-medical-hearing-approaches/ [https://perma.cc/WV8V-SUAW].
[11] Id.
[12] Kyle Swenson, Weed Smuggler Johnny Boone, the Legendary “Godfather of Grass’, Pleads Guilty in Federal Court, The Washington Post (Dec. 21, 2017), https://www.washingtonpost.com/news/morning-mix/wp/2017/12/21/weed-smuggler-john-robert-boone-the-legendary-godfather-of-grass-pleads-guilty-in-federal-court/ [https://perma.cc/X5AK-HMJP].
[13] Id.
[14] Supra note 10.
[15] Danielle Grady, The Kentuckian’s Guide to Marijuana Legalization in Illinois: Where to Buy More, Leo Weekly (Jan. 2, 2020), https://www.leoweekly.com/2020/01/kentuckians-guide-marijuana-legalization-illinois-buy/ [https://perma.cc/TZ7B-P65V].
[16] Id.
[17] Id.