Estimate of medical marijuana cost is way, way off

By Chuck Warren

Published by The Salt Lake Tribune

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.”

The GOP Needs Points on the Scoreboard


Published on PJMedia

Call me cynical, but I am dubious that Republicans are going to repeal and replace Obamacare before an abbreviated August recess.  Please note, I don’t think Congress should take a recess until Obamcare and tax reform are on the President’s desk, but let me not digress here.

If Republicans don’t start getting some wins, Americans have every right to ask, “What good is it with you folks in the majority?”

It’s a fair question … a question we either need an answer to or we truly are proving that DC was not only built on a swamp, but the swamp has now encompassed it.

Americans – contrary to much of the DC and NY press corps desire – want Congress to get some tangible  conservative things done. If Republicans do not understand this basic fact – they will be seen as incompetent, do-nothing bureaucrats posing as Congresspersons who are spending all their time fighting Russian rumors accusations and hostile, progressive led town halls.

So if by chance Republicans can’t seem to unite behind Obamacare replace and repeal legislation to send to President Trump later this month, here is some practical advice to get some points on the scoreboard and show Americans Congress can still work.

  1. A stand-alone bill eliminating the individual tax/mandate on people who don’t want insurance. If some don’t want to get behind this common sense bill, then include a amendment that if you don’t have insurance and a medical emergency requires you to visit a ER, then like student loans, make it impossible to declare bankruptcy on this debt. Have on the President’s desk in August. #Win
  2. Eliminate the anti-competitive, job killing Medical Device tax. Have on the President’s desk in August. #Win
  3. Have House Speaker Ryan and Senate President McConnell invite all 50 state’s governors and Congressional Democrat leadership to a working session, close the doors, sit-down to discuss and negotiate the Medicaid portion of an insolvent past-hope called Obamacare. Have an actual working session on how to handle Medicaid, how to make it work for the states and taxpayers and a really important fact, come to a resolution how to pay for it. Those who have skin in the game should be at the table. #NowOrNever

No more drip-drip-drip in this slow Waltz that is quickly turning into the Dance of Death, literally for the millions who are beginning to look away from the city always meant to be a beacon of hope on a hill.

Time to rattle the chain and stop this process from being the standing joke on everyone’s tongues each morning at coffee shops from Portland, Oregon to Portland, Maine.  Republicans and conservatives need to practice “adulting” and get some wins – for their electoral hopes and more importantly, for the good of America.


There is a reason they are called entitlements

By Chuck Warren, September Group, LLC; Salt Lake City, Utah

May 4, 2017 Posted on

Entitlement programs consume an inordinate share of government spending and are the main driver of federal deficits. Not surprisingly, the three largest in the federal budget are Medicare, Social Security and Medicaid. All entitlements.

States aren’t able to print their own money and each year must balance budgets, making new entitlement programs a very serious commitment. Despite Utah’s fiscal discipline, these programs continue to increasingly encroach on other state needs, taking up a growing share of our budget each year.

Though our state rejected Medicaid expansion under the ACA (Obamacare), Medicaid spending in Utah has increased 77 percent in 15 years and is projected take a full 30 percent of our general fund by 2020.

Because the majority of newly insured individuals nationwide receive health coverage not through private plans but through Medicaid, the pressure on entitlement spending across the country is growing. As the word itself denotes, once people are granted entitlements they feel, well, entitled. And how does a government ever really pull that back?

In a recent New York Times article, Robert Frank explained repeal of the ACA would “precipitate a political firestorm of epic proportions” because of a well-known concept among social scientists called loss aversion. Frank explains that we humans are willing to expend greater effort resisting the loss of something we already possess than acquiring something we don’t already have.

Unfortunately, this means very difficult choices need to be made in states that already chose to expand Medicaid. State cost sharing begins this year and expansion costs are not only 49 percent higher per enrollee than projected, the number of enrollees far exceeds estimates. States are left with the decision of either pulling money from priorities such as schools, roads or other social service programs or simply doing away with expansion altogether. Good luck with that. See above, “loss aversion.”

Medicaid expansion under Obamacare didn’t allow any coverage cap or limit on state dollars. Once the program was implemented, the state became responsible for its share of costs regardless how high they might go. Those championing Healthy Utah claimed once the state had to start paying, or once the costs were simply too high to afford, the entire program could simply be dumped. Not only is this cruel, but the political reality is it would probably never happen. The Medicaid expansion would have continued to suck the life out of other state programs for decades.

Initial numbers on Governor Herbert’s Healthy Utah plan indicate a state cost of $40 million by 2020. One year later that number had risen to $80 million and the overall cost had gone from $400 million to $800 million. These are staggering figures for a proposal that would cover a very small portion of our state population and based on the assumption only half of those eligible would enroll. Average enrollment has been more than double projections nationwide and we have no reason to believe Utah would be different.

If the governor were to have succeeded in passing Healthy Utah, our state could easily have faced a bill of $80 million this year, with $160 million in obligations by 2020 when we are required to pay 10 percent of the program’s total cost. That $80 million probably would have had to be taken from the $115 million weighted pupil unit increase received by public schools this year. There is simply no other budget item big enough to cover the cost.

Where would we find an additional $160 million, year after year, in just a few short years, to continue funding this program?

House Speaker Greg Hughes saw this coming while some in other states, and some in our own, chose to shield their eyes and pretend the truth wasn’t there. That day of reckoning will be painful not only for them but for those who suffer with the consequences of their poor choices.