Would Malden tolerate a handful of retail marijuana shops if the tax revenue they brought in was used to kill off the Pay-As-You-Throw (PAYT) trash bag program?

Ward 4 Councillor Ryan O’Malley thinks so, and this week he proposed using local taxes on future marijuana sales to replace lead pipes and to eliminate PAYT. The council has been discussing a mix of measures to regulate retail marijuana businesses that want to set up shop in Malden. In addition to O’Malley’s proposal, Ward 3 Councillor John Matheson called for a 12-month moratorium on marijuana sales.

O’Malley’s proposal shifted the debate from zoning ordinances that could severely restrict locations for pot shops to the potential benefits of the retail marijuana industry. The state Department of Revenue has estimated that when the retail marijuana industry is launched, it will generate $64 million in tax revenue during the first 12 months. During the second year of retail marijuana enterprises, the state could take in as much as $173 million in taxes from roughly a $1 billion in sales.

O’Malley said retail marijuana represents a new revenue stream that will benefit the city. Although the law now calls for a 6.75 percent sales tax, a 3.25 percent excise tax and a 2 percent local tax, state lawmakers are expected to jack up those rates.

To demonstrate the financial benefits of retail marijuana sales, O’Malley zeroed in on the much-maligned PAYT program that costs everyone who lives in Malden time, patience and $2 for a 33-gallon blue plastic bag. O’Malley said the revenue from PAYT trash bags sales has been baked into the city budget and there’s no way to end the program without major cuts to other city departments and services. “The only way to remove it would be to replace it with another revenue stream,” he said.

But the tax revenue from marijuana sales would come through the state, and Ward 6 Councillor Neil Kinnon said the city can’t just tell the Commonwealth where to send the check. “It all goes into the city’s general fund,” he said.

However, Kinnon also said projects and proposals could be financed with money bonded against annual marijuana tax revenue. “You cannot say the money is going to do this, this and this, but if you bond it, it ties it up,” he said.

A few councillors had other ideas about how to spend tax revenue from local pot sales.

“Any revenue brought into the city will, hopefully, be used to offset our use of city reserve funds to balance the budget,” said Ward 2 Councillor Paul Condon, chairman of the Finance Committee.

Ward 5 Councillor Barbara Murphy pitched earmarking the money to pay for ongoing efforts to repair and maintain city roads.

“I support the spirit of this paper,” said Councillor-at-Large Debbie DeMaria. “But I think there are other avenues we could discuss, like drug rehab.”

Although O’Malley’s proposal was technically flawed, Ward 7 Councillor Neal Anderson said, the sentiment behind it made sense. The council agreed with Anderson’s call to approve O’Malley’s proposal as a council resolution.

The council also agreed to send Matheson’s proposal for a one-year moratorium on permits for retail marijuana businesses to a joint hearing of the Rules & Ordinance Committee and the Planning Board. The Rules & Ordinance Committee is reviewing the possibility of a zoning ordinance that would limit the shops to the city’s industrial zones.

“I don’t want the pressure of moving quickly,” said Matheson. The state is scheduled to begin issuing retail marijuana licenses next summer.

The new law sets the number of retail marijuana shops that a city or town must allow at 20 percent of the number of liquor stores in that community. Cities and towns can lower that limit, but only if voters approve tighter restrictions.

Matheson said a moratorium would give the city time to let voters determine the number of shops and the zones where they should be located.

“It affords us an opportunity to study the issue and get our zoning in place,” he said.