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Medical States Set to Cash in Millions In Cannabis Sales Taxes From 2013

A scale holds stacks of 100 dollar bills on one side and buds on the other are even in states where MMJ is legal. MMJ states are set to rake in massive revenue from the cannabis industry.


Medical States Set to Cash in Millions In Cannabis Sales Taxes From 2013

Everybody has to pay the “Tax Man”. As we begin to prepare our taxes, so are medical marijuana dispensaries. It’s becoming more apparent that cannabis is a lucrative crop for the Internal Revenue Service (IRS).

Out of the 21 states that have put laws into action to legalize medical marijuana, seven of these are collecting taxes through the regulated dispensaries. According to the Joint Fiscal Office in Colorado; California was the first state to collect taxes for medical marijuana in 2007 at a rate of 5 percent with projected revenue of $21.4 million.

Colorado followed in 2009 and by 2010 Maine, Arizona and Washington D.C. began taxing medical marijuana. Both New Jersey and Rhode Island still are not sure if they will collect taxes from dispensaries but they are prepared, tax laws in place.

The following are some estimates of revenue collected by the states from medical marijuana dispensaries in 2012. Arizona estimates $40 million in collections at 6.6 percent taxation, California estimates anywhere from $59 million to $109 million at 5 percent, Colorado $5 million at 5 percent, Maine $500,000 at 5 percent sales tax and 7 percent meal and room tax, and Washington D.C. collects $400,000 over a four year span at 6 percent.

Projections from the Marijuana Policy Project’s State Medical Marijuana Programs Financial Information for 2013 shows California estimating to collect up to $100 million at a tax rate of 6.6 percent. Colorado will collect $5.4 to $6 million at 2.9 percent, Maine $265,655 at a 5 percent sales tax and 7 percent room and meal tax, New Mexico $650,402 at a tax rate that can range from 5.125 to 8.87 percent, depending on location. For Arizona, New Jersey and Nevada, tax collections are unknown but plans are in place to tax medical marijuana dispensaries. Arizona reports collecting 6.6 percent sales tax, New Jersey 7 percent, and Nevada at a mere 2 percent.

So where does all this tax money go? The Joint Fiscal Office of Colorado reports that the money collected from sales tax provides revenues to the state’s General Fund along with cities, counties, and other local jurisdictions where the sale of medical marijuana was made. All taxes collected from the dispensaries are simply treated equal to all other taxes received from the sale of all tangible personal property.

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