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High Marijuana Taxes: States Or Countries Benefited

High Marijuana Taxes, High Revenues

Cannabis legalization in various states in the U.S brought high marijuana taxes that have been put to good use. Not only that, but it also created a lot of job opportunities and numerous economic benefits.

There are documented reports that there have been a boost of the economy from the states and countries that have legalized recreational marijuana,

Colorado Marijuana Tax Revenue

One of the state pioneers that have legalized recreational marijuana was Colorado in 2012. Amendment 64 was voted YES by the Colorado citizens, which states that the use of marijuana must be legal for persons twenty-one years of age or older and taxed like alcoholic beverages.

Today, there are two ways how Colorado applies taxes from its cannabis industry. These are the excise tax and the retail sales tax.

Excise Tax

If the distributor sells their cannabis to a manufacturer or retail store, 15% will be applied.

Retail Sales Tax

A 15% retail sales tax is applied if any recreational cannabis product is sold.

According to the state Department of Revenue data, the Colorado marijuana tax rate has brought in millions of dollars in revenue each year.

Colorado made about $67.5 million when Amendment 64 went into effect in 2014, and just last year, the revenue of high marijuana taxes reached around $302 million.

Not only does Colorado experiences high marijuana tax revenues, but also in other industries as well, Gross Domestic Product (GDP) of Colorado increased about $41 billion since legalization, as shown by the data of Bureau of Economic Analysis.

Of course, many factors increased Colorado’s GDP; however, it is noticeable that the greatest factor contributing to the increase of their Gross Domestic Product is that of the cannabis industry’s influence on the other sectors such as tourism.

 

Washington Marijuana Tax Revenue

One of the state pioneers who have first legalized the use of recreational cannabis in the U.S. 

Washington and Colorado legalized recreational cannabis in the same year.

Today, the Washington State Liquor and Cannabis Board handles all the marijuana tax matters said by the Washington State Department of Revenue.

 According to the Washington State Liquor and Cannabis Board, Washington’s high marijuana taxes came from a 37% excise tax rate. A 37% excise tax is applied to all sales of taxable cannabis, cannabis concentrates, and marijuana-infused products.

In 2019, a fiscal report published by the Liquor and Cannabis Board states that Washington reached $367.4 million in 2018 and $395.5 million in 2019 for their high marijuana taxes

Much like Colorado, Washington’s recreational sales tax revenue has continued to trend upward. In addition, by distributing it to important community services, the state has made good use of the extra profits.

Like Colorado, Washington’s trend on recreational cannabis, which brought high marijuana taxes, is continuously growing higher and is being used for important community services.

Washington State Treasurer Duane A. Davidson said that a large portion of the revenue from high marijuana taxes goes to the Trust Account of the Basic Health Plan, a health fund that “provides workers and others who lack coverage with the necessary basic health care services.”

Oregon Marijuana Tax Revenue

Oregon was one of the states that joined the second wave of legislative efforts to legalize recreational cannabis.

Oregon passed the Oregon Ballot Measure 91 in 2014, two years before their failed legalization attempt. That allowed the legalization of cannabis to be determined by the Oregon Liquor Control Commission “based on regulation and taxation.”Presently, there is a retail tax rate of 17% on all cannabis retail sales.

There is only a small amount of tax revenue that has been collected in 2016 that is roughly about $20.6 million; after all, it just covered a small part of the fiscal year.

However, according to the Portland Business Journal, the revenue of high marijuana taxes will grow, and in 2019, high marijuana taxes were collected totaling roughly about $102 million. 

 

Alaska Marijuana Tax Revenue

In the same year as Oregon, Alaska’s state voted to legalize recreational marijuana in 2014 with an initial tax rate of 50$ per ounce of cannabis either sold or transferred from the cultivator to the manufacturer or retailer.

Presently, the initial tax can be anywhere from $15, $25, and $50 depending on the quality, types of strain, and at which part of the marijuana plant.

In addition, the Municipality of Anchorage, where the majority of Alaska’s dispensaries are located, has an added retail sales tax of 5 percent on all marijuana products sold.

According to a report from the municipality, the marijuana taxes brought approximately $1.3 million in 2017 and $3 million in 2018, and that was just on the 5% retail sales tax. 

California Marijuana Tax Revenue

California legalized recreational marijuana for use in 2016; 5 years after the legalization of Colorado and Washington even though California in 1972, with Proposition 19, was the first state to attempt to legalize marijuana usage but resulted in failure.

The California Department of Tax and Fee Administration said that when the legalization was implemented, they collected an excise tax of 15%.

Presently, the tax is being collected from the distributors, with 80% marked up prices rather than the retailers.

Even with that very high marijuana taxes California has, the state still collected about 395.3 million in 2018 and $629.3 million in 2019.

Nevada Marijuana Tax Revenue

The same year California legalized recreational cannabis; Nevada voted yes to recreational cannabis legalization in 2016.

Nevada has imposed a 2% excise tax on medical marijuana cultivators.The state imposes a wholesale excise tax of 15 percent and a retail tax rate of 10 percent, according to the State of Nevada.

 Despite the high marijuana taxes, the Nevada Department of Taxation reported around $69.7 million in revenue from the marijuana excise tax for the 2018 fiscal year.

 

Conclusion

Those states that legalized recreational cannabis now enjoy the lucrative and profitable effects of the legalization. With high marijuana taxes, a huge growth in revenue is mostly used by the states for their citizens’ benefits.

This only shows that the cannabis industry gives job opportunities and helps other areas increase the economy.

Reference:

https://www.forbes.com/sites/niallmccarthy/2019/03/26/which-states-made-the-most-tax-revenue-from-marijuana-in-2018-infographic/?sh=259dd4ee7085

https://www.taxpolicycenter.org/briefing-book/how-do-marijuana-taxes-work

https://www.ais-cpa.com/deep-dive-recreational-marijuana-tax-revenue-in-the-united-states/

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