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Iowa GOP leaders rule out cannabis legalization for now, but some say money will eventually turn heads

Most Americans continue to support the legalization of cannabis, as the medical use of cannabis is legal in 40 states and the District of Columbia and recreational cannabis is legal in 24 states and the District of Columbia. Early indications are the second Trump administration will continue the cannabis legalization policies of the Biden administration, including the rescheduling of cannabis at the federal level. Although three of four state ballot measures for recreational legalization failed in the November 2024 election (Florida, North Dakota and South Dakota), as many as five states are projected to legalize it in 2025. Iowa is increasingly becoming the exception.
Like most public policy issues, expanding the availability of medicinal cannabis products and legalizing recreational cannabis sales in Iowa is complex. Social justice, health, law enforcement, employment, agriculture and many other elements are part of the legalization movement and counter-movement. Ultimately, some observers say, it’s about the money: the potential tax revenues that the state coffers may eventually need after cutting the income tax rate and administration spending to the bone and then spending significantly more on the private school tuition voucher program. Mike Tramontina, former state deputy treasurer and former director of the Iowa Department of Management, says the Republican-controlled state Legislature and administration have “walked into a fiscal trap.”
“The state has a strong financial balance now, primarily because of federal money and the strong economy. Public education, natural resources, regulation of nursing homes and every form of regulation have been cut much further than they should. The overspending for private school vouchers will continue to escalate rapidly,” Tramontina said. Estimated to cost $106.9 million during the first year (2023–24), private school voucher spending totaled $128 million. The projected cost for the 2024–25 school year was $132.3 million, but the Legislature approved $179.2 million. Critics of the program say most of that money subsidizes affluent households with children already attending private schools. “When it becomes apparent the state will experience shortfalls, it will need new revenue. The Legislature, as in most Republican-dominated states, dare not go for more income and sales tax. The taxes on cigarette and alcohol sales are already quite high. They will need a new sin tax and, I predict, it will be the legalization of cannabis,” Tramontina added.
He estimates the state will need $40 million to $50 million in new revenues and the current and very limited Medical Cannabidiol Program will never generate those amounts. Although statistics are difficult to find, Iowans who want to purchase either medicinal or recreational cannabis can drive a few hours or even minutes across the borders into Illinois, Minnesota and Missouri, boosting the economies and tax revenues of those states. Last fall, Iowa House Democrats listed the legalization of cannabis for adult use as one of their primary legislative initiatives for 2025. During a news conference in September, House Minority Leader Jennifer Konfrst predicted Gov. Kim Reynolds would likely oppose any cannabis legislation from Democrats during 2025, although about 60% of Iowans support legalization.
As is the case in many other states, the legalization of recreational cannabis and the expansion of the current legal medical cannabis program in Iowa will continue to be a hot issue. Internal and external forces will determine whether and when the majority of Iowans who support the legalization of recreational cannabis and a majority of Iowa legislators, who don’t, will agree the time has come.