Passage of Vermont’s legalization bill, H. 511, was a huge step forward for the state — and the nation. Now that Gov. Scott has signed this bill allowing personal possession and cultivation, effective on July 1, it’s time for the legislature to begin moving forward with plans to regulate and tax marijuana production and sale for adults 21 and older.
Some legislators who voted NO on H. 511 have already said that they support regulating and taxing marijuana. Others are reconsidering their positions now that it’s clear that marijuana will soon become legal. A bill on this issue, H. 490, is still active in the House after being carried over from last year.
After weeks of persistent advocacy from Massachusetts residents, the Senate and House have reached a compromise that largely respects the will of the people. The House’s flawed “repeal and replace” bill would have made disastrous changes to the law voters approved, and we are relieved that the Legislature has agreed to a more sensible plan for implementing legalization.
The compromise bill’s most significant changes relate to local control and taxes. The legislation adjusts the local control policy, allowing local government officials in towns that voted “no” on the 2016 ballot initiative to ban marijuana businesses until December 2019. For towns that voted “yes” in 2016, any bans must be placed on a local ballot for voters to approve. The maximum tax rate — which depends on whether towns adopt optional local taxes — will increase from 12% to 20%. Under the bill, the state tax will be 17%, and the local option will be 3%.
MPP and our allies successfully led the 2016 campaign to legalize and regulate marijuana in Massachusetts. After our historic victory in November, it was concerning to see some members of the House propose drastic changes to the initiative approved by the voters. But thanks to the work of thousands of dedicated supporters across the Commonwealth, the law approved by voters will remain largely intact.
The bill isn't perfect, and we preferred the original language of the ballot initiative. However, given how problematic the House bill was, we are satisfied with the final compromise.
We generated over 1,000 calls to state legislators urging them to reject the House’s “repeal and replace” bill. To everyone who made a call, thank you!
The Colorado Department of Revenue’s announcement that $1.3 billion in regulated marijuana sales took place in calendar year 2016, generating nearly $200 million in state tax revenue. These figures do not include millions of dollars in revenue generated by local taxes on marijuana.
The Cannabist reports:
To put the state’s third year of regulated recreational marijuana sales in perspective, Year One totaled $699.2 million (combined with medical sales) and Year Two jumped up to $996.2 million. The trend should continue in Year Four, but beyond that? It’s a murkier proposition.
2016 was the year in which the $100-million-month became a baseline and heralded a record-breaking summer: The combined sales for July, August and September were $376.6 million.
Monthly sales topped $100 million in eight of the 12 months. In December, which is typically a strong month for cannabis transactions, pot shops’ sales were a little more than $114.7 million, a 13 percent increase from the $101.3 million recorded in December 2015.
MPP's Mason Tvert had this to say:
“Over one billion dollars in marijuana sales that once took place in the underground market were instead conducted in regulated businesses this year. The state received nearly $200 million in marijuana tax revenue, whereas just a decade ago it was receiving zero. Hopefully this will be a wake-up call for the 42 states that still choose to force marijuana sales into the criminal market and forego millions of dollars in tax revenue.
“Marijuana tax revenue is not going to cover the state’s budget, but it is going to cover important programs and services that would otherwise be left out of it. This money is just the tip of the iceberg. The state is also reaping the invaluable public health and safety benefits of replacing an underground market with a tightly regulated system. Marijuana is now being sold in licensed businesses, rather than out on the street. It is being properly tested, packaged, and labeled, and it is only being sold to adults who show proof of age. The system is working.”
According to a report acquired by the Phoenix New Times, Arizona stands to gain $48 million in tax revenue annually by regulating marijuana like alcohol:
The Joint Legislative Budget Committee produced a report in September on the estimated impact of legal marijuana, but didn't release the data publicly. New Times obtained a copy of the report this morning.
Prepared in response to a legalization bill proposed earlier this year by a group of Democrats, the JLBC report shows that Arizona could enjoy a large boost in revenue for schools, health care and other services simply by taxing people who already use marijuana.
The Democrats' bill would have made marijuana legal for adults 21 and older, and would have allowed the plant to be sold in retail shops with an added $50-per-ounce tax.
The bill died in committee back in April, but a similar measure could be revived when the legislature reconvenes in January. Whether or not lawmakers do anything, Arizona voters are likely to see a legalization initiative on the ballot in 2016. Coordinated by the Marijuana Policy Project, the initiative is still in the drafting stage but will almost certainly include a tax-collection scheme.
Martin Nickerson has filed a federal lawsuit against the state of Washington, attempting to bar the state from collecting taxes on marijuana sales. Washington state officials are demanding that he pay taxes on those sales to the tune of $62,000. However, since Nickerson is under prosecution for the criminal sale of marijuana as a medical marijuana producer, he claims that forcing him to pay taxes on his sales would violate his constitutional right against self-incrimination.
Alison Holcomb, an attorney with the American Civil Liberties Union who was the main author of Washington State's successful ballot initiative, said the lawsuit has a low probability of taking down the state’s legal marijuana system.
Suppliers like Nickerson have already made public their intent to break federal law, Holcomb said, so paying taxes on their proceeds would not do much to further incriminate them.
"Paying taxes on marijuana implicates you, but so does everything else about being engaged in this system," she said.
Ultimately, the case brings into question whether federal laws trump state laws when it comes to collecting tax revenue generated from marijuana sales. The outcome of this case could have a significant impact on medical marijuana businesses around the country.
Colorado lawmakers moved the marijuana industry away from its cash-only roots on Wednesday when they approved the world’s first financial system for marijuana businesses. The plan sets up a network of uninsured cooperatives, which gives the industry an avenue to basic banking services.
Even in light of Eric Holder’s comments on banking, marijuana businesses have still had a hard time finding banks to even let them open checking accounts, for fear of committing a federal crime. According to an AP article by Kristen Wyatt, “Shop owners in the state say a small number of credit unions will do business with them, too, though no banks or credit unions have said so publicly.”
Colorado’s new plan for banking would let marijuana business pool money in cooperatives, which would let stores accept credit cards and checks. However, these co-ops would need U.S. Federal Reserve approval first.
The plan has bipartisan support, partially because it gives the state the ability to audit marijuana shops and make sure they are paying taxes. Even Gov. John Hickenlooper supports the plan, and has pledged to sign it into law once he receives the final language of the bill.
Establishing a co-op-based banking system for marijuana businesses reduces the risk of crime by moving large cash reserves out of stores and into banks. It makes the industry more accountable and establishes a system that other states can follow as they begin to tax and regulate marijuana.
The New Hampshire House Ways and Means Committee voted to amend HB 492, which would make marijuana legal and regulate it like alcohol, in order to simplify the tax structure and regulatory language. The committee then voted 14-5 to recommend that the House not pass the bill, which would also allow people 21 and older to possess up to an ounce of marijuana. The House is not bound by this recommendation, and will vote on whether the bill should progress to the Senate soon.
The committee’s amended bill taxes and regulates marijuana by imposing a standardized $60 per ounce tax on growers. Advocates claim the tax will generate approximately $25 to $30 million annually.
MPP’s Matt Simon commented that, “Even with a negative recommendation, this thoughtful amendment will make it much more likely that the bill will receive continued support from the rest of the Legislature. We are optimistic that New Hampshire lawmakers will recognize that their constituents do not want to see adults arrested for using a substance that is safer than alcohol.”
When the bill returns to the House, it will have a battle with its new amendments, especially since it passed the House with a 170-162 vote on January 15. Sixty percent of New Hampshire adults support HB 492, according to a WMUR Granite State Poll released in October by the University of New Hampshire Survey Center. Just 36% said they are opposed. The entire poll is available at: http://cola.unh.edu/sites/cola.unh.edu/files/research_publications/gsp2013_fall_gastaxpot102513.pdf.
California Democrats approved adding a position in support of taxing and regulating marijuana to the party’s platform Sunday, despite opposition from Gov. Jerry Brown (D). This is a major shift in the Democratic Party stance on legal marijuana use in the Golden State, and was spearheaded by long-time activist Lanny Swerdlow and the Brownie Mary Democratic Club.
California was the pioneering state for medical marijuana, which was made legal in 1996, but since then has stalled on creating a regulatory structure for cultivation or sales, and the legislature has been unwilling to seriously consider making marijuana legal for adults.
Leading up to the party shift this weekend, Lt. Gov. Gavin Newsom, formerly the mayor of San Francisco, made the case for marijuana, swaying moderate Democrats by reassuring them, “You can be pro-regulation without being an advocate for drug use.”
Newsom’s advocacy was contrary to Gov. Brown’s interview on “Meet the Press” the last week, in which he voiced peculiar concerns over marijuana’s effect on alertness. “The world's pretty dangerous, very competitive," Brown said. "I think we need to stay alert, if not 24 hours a day, more than some of the potheads might be able to put together."
The platform language specifically calls on Democrats to "support the legalization, regulation and taxation of marijuana, in a manner similar to that of tobacco or alcohol." The tipping point in this shift may stem from Colorado’s preliminary tax revenue generation of $2 million dollars for the month of January. However, revenue clearly is not the only factor; a recent Field Poll found a 55% majority of voters support legalization.
Oregon Democrat Earl Blumenauer Teaming Up With Grover Norquist to Push Marijuana Industry Tax Reform
In yet another case of people with disparate political ideas coming together to support marijuana policy reform, Rep. Earl Blumenauer (D-OR) and Americans for Tax Reform (ATR) president Grover Norquist held a press conference Thursday to announce the release of a white paper protesting the unjust application of tax codes to marijuana businesses, Legal Cannabis Dispensary Taxation: A Textbook Case of Punishing Law-Abiding Businesses Through the Tax Code.
Under current policy, marijuana businesses are not permitted to deduct many of their operating expenses and are forced to pay significantly more taxes than other industries.
Earlier this year, Rep. Blumenauer introduced H.R. 2240, the Small Business Tax Equity Act, to eliminate the unfair treatment of legitimate marijuana businesses by the IRS. The bill is supported by ATR, the National Cannabis Industry Association, MPP, and more than a dozen members of Congress.
A recent investigation into drug treatment centers in southern California found rampant financial corruption and inflated reporting of patient attendance.
The investigation, conducted by the nonprofit Center for Investigative Reporting and CNN, found that dozens of clinics showed signs of deception and questionable billing practices. The two worst offenders, Able Family and GB Medical Services, were virtually empty storefronts run by convicted criminals that bribed clients and submitted fake names to a government insurance provider in order to collect millions in taxpayer money. Over the past two years alone, the clinics indicted by the investigation received $94 million in public funds.
According to CNN’s interviews with former state officials, California’s Department of Health Care Services has “fielded concerns about rehab clinic fraud for at least five years yet has done almost nothing to combat it.”
While these findings demonstrate the need for reform in California’s regulation of drug treatment centers, they also provide additional evidence that the number of people in treatment for marijuana use is inflated.
A 2010 report by the U.S. Department of Health and Human Services found that a majority (57%) of participants in drug treatment programs for marijuana were referred there by the criminal justice system. In other words, users who were arrested for simple possession were offered the choice of “treatment” or jail time.
With all of the money to be made from these programs – through forced attendance or unscrupulous government agencies forking over taxpayer money for fake clients – it is of little surprise that some of the most vocal critics of marijuana policy reform own and operate treatment clinics.