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Everything You Ever Wanted To Know About Marijuana and Taxes
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New data indicates that tax revenue from marijuana in Colorado has nearly doubled in the last year, increasing from $4.9 million by June last year to $9.7 million by June of this year, according to arecent report from the Colorado Department of Taxation.
These figures are just for “Marijuana Taxes, Licenses, and Fees Transfers and Distribution.” Overall, Colorado expects to bring in $100 million per year from marijuana (taxes from medical marijuana sales are reported separately), indicating a growing trend that benefits the state’s budget.
Forbes recently provided a good account of the marijuana tax situation in Colorado. There are three taxes on recreational marijuana sales: a 2.9 percent sales tax, a 10 percent marijuana sales tax and a 15 percent excise tax. That’s 27.9 percent total.
However, medical marijuana is taxed at only 2.9 percent, and 23 percent of Colorado’s marijuana users can buy medical marijuana. Forbes estimated that 40 percent of Colorado’s marijuana purchases take place outside the legal system, in part due to medical purchasers reselling their marijuana to recreational users.
While tax revenue is growing in Colorado, policy makers and analysts are learning more about the economics of legal marijuana. Among the lessons learned is that the legal market loses business to illegal, unregulated markets if tax rates are too high.
Washington State took in $70 million in taxes during the first year of legalized marijuana on about $257 million in legal sales.
However, the legislature decided to change the excise tax structure this year. They replaced a regime that taxed every stage from production to processing to retail sales to one that just taxes retail sales. Washington went from a 25 percent tax at each level to a 37 percent tax on the retail customer. The reasons for the change involve accounting procedures; the new structure provides some relief from federal taxes for marijuana retail stores (as it changes what receipts are classified as income).
But one of the other problems was that recreational marijuana was costing more than three times the price of medical marijuana in Washington. The merging of the two markets (Washington is closing down the medical market and using the recreational market structure for all legal marijuana sales) and increased production is contributing to a drop in prices.
Source: http://truthisscary.com/2015/08/everything-you-ever-wanted-to-know-about-marijuana-and-taxes/
