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What Is A Fair Tax For Marijuana Sales?

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Something that has always worried me is that when marijuana legalization is implemented, it will be taxed so high that the transition won’t be as successful as it could be. One of the biggest arguments that we have made for so many years in support of marijuana legalization is that it would demolish the black market. However, that will only work if legal marijuana prices are better than the black market prices for the same thing. Most people aren’t going to drastically change their spending habits to pay a significantly higher price.

I think it’s going to be hard to find a marijuana tax rate that pleases everyone. If it’s too low it won’t generate the revenue that was promised to the government, which opponents will point to early and often. On the other hand, too high of a tax will push customers away from the legal market and into the black market. What do readers think is a fair rate? I personally think that proposals for a 30%+ tax on marijuana is way too high in Colorado and Washington. I would personally feel more comfortable at about 10%, which is still very high compared to other taxed products.

The way the tax rates play out in Colorado and Washington will largely affect future legalized states and how they handle their tax rates. Below is a great video of TWB contributor Radical Russ Belville discussing this very topic:

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31 Comments

  1. I believe there shouldn’t be a tax. Is there tax on prescription medication at your local pharmacy? If so, then THAT going tax should be the standard. NO DIFFERENCE. Why tax the same a cigarettes? Cigarettes cause cancer, Medical Marijuana treats it. Don’t compare the two. It’s like the old saying, ” You can’t compare apples and oranges”. We’re already taxed to death. When is enough, enough??

  2. It would be interesting to see Insurance companies’ rational for raising insurance rates on consumers of near-harmless, extremely beneficial marijuana.

    As the preeminent researcher of marijuana and lung disease, UCLA’s Dr. Donald Tashkin, conducted investigations over 30 years, initially believing there must be a causal relationship. But he finally concluded that smoking marijuana does NOT cause cancer or ANY other serious disease.

    “We hypothesized that there would be a positive association between marijuana use and lung cancer, and that the association would be more positive with heavier use. What we found instead was no association at all, and even some suggestion of A PROTECTIVE EFFECT.”

  3. the taxes for marijuana should be estimated the same as they would for alcohol or cigarettes. we’ll have to remember to expect health insurance rate hikes unless it’s medical. but the insurance companies will find a way to jack your rates any way. Much like tobacco use and alcohol use. much like all things political…. it’s a money game.

  4. I think that the tax rate should be the same as cigarettes this coming from a smoker of both make it 100% legal

  5. The prices and taxes on cigarettes in New York are higher than that, I think — the highest in the country. So of course loosies became very popular. Just goes to show that you can’t overprice legal products, or else you’re gonna get illegal sales.

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  7. Robert Dewayne King on

    Look at it this way , I know a lot of folks who run the risk of buying cheap cigs in North Carolina (app $15 a carton)and smuggling them into NY !
    Sell for $25 ( NY taxes make a carton cost $40)

  8. Did you ever hear of the NFL ? That is welfare. For the rich. Cannabis. Is from a seed ?how. to tax a seed ? What next millions ? Oranges ? Apples? What? cotton? . Why not all seeds .Good tax money .More welfare for the rich .Not sure but I believe somewhere Taxation and representation went to gather .OH! not so fast, .not so fast.

  9. Yes. We are still a long way from freedom. We could even be pushed back. That’s why I despair about the major reform groups passing on a legalization initiative in California next year.

    It could easily be our best, or only, shot.

  10. That’s how it seems to be done in NM. No extra tax like alcohol and tobacco, just sales tax. Edibles are not exempt like the rest of food. I think that is fair, almost. Medical marijuana should be exempt.

  11. All I can say is….If the tax rate is too terribly high on legal recreational marijuana, I will still keep my D.D. paid.

  12. Most business, cannabis or otherwise, would not just be like “okay, we’ll take the hit;” the practice is to raise prices, passing it down to the consumers. That’s the way business is run.

  13. From your comment: I prefer Alcohol to be in the same boat as Marijuana ” Illegal ” again until we know how to use in a safe way like Marijuana.”

    I have been smoking weed since I was 13 yrs old and now I am 49, I have, YET, to use it in an UNSAFE way.

  14. From your comment: I prefer Alcohol to be in the same boat as Marijuana ” Illegal ” again until we know how to use in a safe way like Marijuana.”

    I have been smoking weed since I was 13 yrs old and now I am 49, I have, YET, to use it in an UNSAFE way.

  15. The government will get their pound of flesh. There was never any doubt about that.

    But there is much confusion about what the price of pot will be. After the dust settles on re-legalization, average quality marijuana will sell for around $50 an ounce.

    All these growers, dispensaries and tax authorities need to get the black-market stars out of their eyes. There will be around $20 to $30 in taxes per ounce.

    Home growing will keep everyone honest. If the price plus taxes edges over $100 an ounce, vast numbers of consumers will just grow their own. That will reduce commercial demand which will, in turn, bring prices back down to earth.

    It’s just a plant.

  16. Marijuana, at minimum, deserves to be taxed less than alcohol and tobacco. It’s far safer, and safer than almost all OTC drugs on the market.

  17. And speaking of the price of weed. I wonder how long it will be until weed futures are traded in the commodities market?
    A recent futures price on corn was $4.20 a bushel. That’s about 56 pounds of shucked dried corn.

  18. Mark kleiman is a prohibitionist. A fox in in the hen house. His estimation of how much it will cost to grow legal weed is off the charts wrong. Sure it will take a year or two for the price to stabilize to farm levels, but get real. It doesn’t cost that much to farm marijuana, on economies of scale. I am willing to bet that Kleiman’s goal, is for legalization to fail. I hope I am wrong WA.

  19. I believe there should be a uniform Marijuana tax (nation wide) upwards of 17%. I know it seems a little steep but paying maybe a little higher taxes is a fair trade for it being legal. Also I’ve herd the many dispensaries are picking up pounds of medical grade for $1200 lb and selling that same pound for $20/ gram?? Do the math, I say bring on the tax for legalization and let the dispensaries take the hit and ultimately making it more cost effective going the legal route.

  20. they are already getting a dividend peace from from the war on drugs which covers the judicial law enforcement incarceration paper work etc..now they want to double dip for what welfare for the rich?

  21. something wrong with you I think you smoke to much or don’t understand what he actually saying cause I can totally understand what he means. But, i agree with you on taxing the same as Alcohol but, that other b.s. you saying doesn’t make since for over hundred decades can’t be change trust me. Cause all these restaurant and stores not going allow that to happen cause you wouldn’t have a Subway, or your want the kids to insult you.lol Thats fun how you said chips, soda, and candy you must do not know what those things contain even though its not healthy for you but making it expensive by adding the same taxes as Alcohol is cra, cra. I prefer Alcohol to be in the same boat as Marijuana ” Illegal ” again until we know how to use in a safe way like Marijuana. I bet you all who smoke Marijuana wouldn’t smoke in front of a Police officer but you drink in front of them like you can’t get in trouble if you drive you lose your license. Marijuana you do a year in jail for having a lil bag but, Alcohol you go to jail and they wait for you to sober and have you call a closet relative or friend to pick you up and you a court date set then DD class you take before you drive one thing you learn is not to drink and get caught driving but no one never learn to not drinking and drive but afraid to step up and say I smoke Marijuana for a reason not for enjoyment. Like most people go to get twisted on Thursday Nights – the Weekends and wondering how you got home you should be concern you are alive. Marijuana smokers have better judgement then Alcohol drinkers. Candy, Chips, and soda do not have nothing to do with this topic thats your personal issues that you wish to see. So, I can tell you, that will never happen taxing that as Alcohol.

  22. It should be exempt from taxation IF it is medically prescribed. If it is being purchased for recreational use, it should be hit with the same tax as alcohol. In Colorado there are lots of folks who are using it strictly for the medicinal benefits (count me in that category) and not the yippie-skippies who are using it recreationally (though I completely agree with those who do…. their business, not mine). If someone makes a purchase with a prescription, that medicine is not taxed. If they are buying without a prescription but just for the fun of it, then the normal sales rate for other recreational products (alcohol, cigarettes) should be assessed. (extending that, I would also say that candy, soda, chips, and any processed ‘food’ that is not technically FOOD should be taxed at the same rate as the alcohol, cigs and pot.

  23. Its a fact, if they tax it higher than current prices by too much the black market will thrive.