By Veronica Morgan
Can taxes make the difference in how well legalization will work? Experts say yes, pointing to Washington’s SB 6062, which will radically change the tax framework currently in place. Currently, legal pot is taxed at a rate of 25% to the growers, 25% to those who process the plants, and an additional 25% at point of sale, forcing the price of marijuana to skyrocket, thus driving black market sales through the roof.
Tax reforms propose a onetime only 37% tax of retail sales, which, they hope, will keep prices low, encouraging legal sales over the black market. Colorado currently imposes taxes of approximately 30%, with slightly higher rates in certain areas. Although the revenue Colorado received was far less than anticipated, the market is healthy, compared to that of Washington.
The push to legalize marijuana for recreational use has seven states in line for 2016 reforms. California was the first state to legalize medicinal marijuana. It has been twenty years since that first giant step, and now four states and the District of Columbia have made pot legal to all residents. Massachusetts, California, Missouri, Hawaii, Maine, Arizona, and Nevada will all have ballot measures seeking to legalize the herb, which has been medically proven to help a variety of ailments, as well as providing a gentler buzz than alcohol provides.
The west is leading the pack in legislative reform, but the rest of the country is swiftly catching up. If the states want tax revenues, they need to make a profitable business market. We learned in Washington that triple taxation simply does not work economically.
Black market sales flourish in Washington, despite the legal status of pot. Lawmakers are looking to Colorado as a standard of good business. With the lower tax rate, the black market holds little appeal. The difference in cost is negligible.
2016 promises to be a landmark year for cannabis enthusiasts and patients as these seven states are anticipated to legalize for recreational, as well as medicinal use. The tax structure each state proposes will largely determine if they can curtail the black market sales of cannabis. If lawmakers want to secure solid tax revenues from sales, they must keep taxes to a minimum. Over taxation will only keep the black market alive.