According to Bradley Tusk of Tusk Ventures, a cannabis venture capital company, the Republican tax bill passed in early December may actually encourage states to legalize medicinal and adult use cannabis. Here’s his reasoning:

The Tax reform bill passed in the Senate removes the state and local tax deduction, known as SALT. Presumably, the reason for this is to increase Federal revenues while exacting revenge on predominantly blue states like New York, New Jersey, and California. However, the unintended side effect, according to Tusk, is that states will now find it more difficult to raise income taxes. As a result, that will look for alternative sources of income.

Legalizing medical or recreational marijuana is an easy way to generate extra income for the state without the need for income tax increases.  For example, Colorado which has both medical and retail marijuana, is expected to take in $250 million in cannabis related taxes in 2017. That’s close to $50 per resident and can have a significant impact on state finances. California, which is due to legalize recreational cannabis in 2018 could stand to earn $2 billion a year in taxes.

It remains to be seen whether the House will keep the clause eliminating SALT deductions, but the general consensus is they will. Will this lead more states to consider legalizing marijuana to some degree? It’s unproven, but an interesting theory.