Federal marijuana taxes could hit 25% under Senator Chuck Schumer’s legalization plan.
The vast majority of Americans want to have legal cannabis on a federal level, there are numerous polls that support this notion. The problem, however, comes down to “how” it is supposed to be done.
For the past few years, Senator Chuck Schumer has been the most vocal about legalizing cannabis on a federal level and has been attempting to push his cannabis legalization bill which aims to remove cannabis from the controlled substance act, while also creating provisions for minority business owners to gain easier access to cannabis licensing.
One would think that this would not have too much opposition, however, as of now, the bill has not gained too much traction. One of the main reasons comes down to taxes. While the senator might be well intentioned in his approach, his proposal of high taxation got a lot of flak from cannabis reformists.
According to an article on Roll Call:
It (federal legalization) would land at 25 percent of a federal prevailing price, charged per ounce of product sold in flower form, or per milligram of THC — a psychoactive compound known to give marijuana users a high — for edibles, vapes and other alternatives.
Tax credits would slash rates in half for the first $20 million in annual sales, creating an effective rate as low as 12.5 percent for small businesses.
However, these taxes would solely be applied to recreational cannabis. Any FDA approved treatment would be void of paying these taxes. This could mean a significant boost for medical marijuana, but many advocates in legal states claim that this tax system will only continue to embolden the black market. In fact, since Canada legalized cannabis the majority of sales have remained a black market preference.
This is due to THC caps and excessive pricing – and the same can be said of California. California has a problem where it produces too much weed to be sold recreationally, and due to federal prohibition cannot export it to other states. As a result, a lot of the weed continue to be sold on the black market and taxes is one of the main reasons why people prefer to buy from their dealer and not from a licensed store.
According to Senate democrats:
“As more and more states move to legalize cannabis for both adult and medical use, the federal government has an important role to play. Hundreds of millions of Americans live in states that have legalized cannabis in some form while it remains illegal at the federal level. This discrepancy leads to confusion and uncertainty and raises significant questions around criminal justice reform, economic development and small business growth, and public health and safety, all of which we believe require some type of federal answer.”
As mentioned, they may have good intentions, but if they are incapable of seeing how high taxes would act contra to their intentions, this bill is pretty much dead in the water.
GOP to the Rescue?
Who would have thought that a GOP sponsored cannabis bill would be the most comprehensive and clear cut road to legalization. Where the Democrat sponsored bill would want to raise taxes on cannabis up to 25%, the GOP bill places a 3% tax on cannabis and that way, maintain low competitive prices allowing minority business owners a fair shot at participation.
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