First published: October 12, 2020.
Due to the ongoing US federal ban on cannabis, states must implement their own regulations and various excise and sales taxes. Excise taxes in many western US states tend to be 15%, while others, like Washington, charge 37%.
Additional fees may apply in the form of additional council taxes, grow rates per ounce, potency, and other measures depending on regulations.
Cannabis markets typically see varying levels of success with the revenue they generate and where the money goes.
How states tend to allocate tax revenues from cannabis
“Most states use their cannabis tax revenues for various public health and safety, education, and social justice programs,” said Laura Bianchi, a partner at a cannabis law firm Bianchi & Brandt.
Funds also often go to programs to combat drug abuse and the effects of the drug war.
“Programs that provide transparency to the public, including a clear understanding of how such revenue is being used and applied, are essential,” Bianchi said. “Tax models that track the use and impact of these funds are also important, both from a public policy, community support, and efficiency perspective.”
States also need to balance the benefits of cannabis taxes without making the illicit market attractive to consumers, she says.
In Oregon, funds are allocated to education, the city, the police, and state health departments. but not social justice reform.
“You’re seeing more states writing this into their legalization statutes,” said Kendra Freeman, co-founder and chief product officer of the Portland, Oregon-based CBD brand Mendi. Illinois and Michigan have more robust social justice plans, she added.
police funding
Freeman is among those in the cannabis community who say money shouldn’t be poured into the police force as long as the war on drugs and drugs continues capture inequalities continue.
“Cannabis was made illegal to keep BIPOC in poverty and keep them locked up,” Freeman said. “We have much…
