The marijuana taxes enacted by States (from 15-35% of sales), in addition to taxes on newly created cannabis jobs, businesses, and retail spending, has created a new-found tax boom for Governors and their budgets. This comes at an opportune time when:
- the federal government is attempting to reduce payments to states,
- raising existing state taxes is very much against voter sentiment, and
- taxes from mature industries (real estate, travel, hospitality) are flat or declining.
State marijuana tax revenues were close to $700 million in 2017, and are expected to hit the $1 billion mark by 2019. If cannabis were legalized in all 50 states, estimated tax revenues by 2025 are $130 billion! That includes estimated job creation of over 700,000 new jobs.
Marijuana tax revenues are even outpacing taxes from liquor. In Colorado, marijuana taxes reached $119 million in 2017 compared with liquor taxes of $38 million. In Nevada, marijuana produced $70 million in taxes vs $49 million from alcohol.
One limit on consideration of tax rates is the black market that still exists for marijuana sales. With legalization, many growers and distributors have come above board and gone legal. But not all. The black market still exists, and is taking business from legal business entities. As taxes on legal cannabis get higher, consumers are driven to the black market for lower cost and perhaps lower quality product.
A big question arising in numerous states is, “What are the states doing with all that money?”
CannaTrials believes a portion of those revenues should be plowed back into the industry – to improve safety and labeling standards, as well as support for clinical trials.
Stay tuned. We’ll keep you posted.