Tax on Medicinal Marijuana

One of the common points that arises when discussing legalization of Marjuana is the tax revenue that could be raised, as well as the decrease (or increase of price).

So what tax rate (if any) is applied to medicinal marijuana?
How does the price compare between medicinal and illegal marijuana?

If this has been previously discussed please feel free to link me.

For the most part, the tax rate doesn’t change, but the assumption is that people will report the income on medical marijuana, but not on illegal marijuana. Some people like to talk about collecting sales tax, but very few (if any) states apply sales tax to prescription medical goods, thus there’d be no sales tax on medical marijuana.

Of course, there might not be any tax. There’s a local Washington-state medical marijuana seller who formed as a nonprofit to avoid federal taxes, and there are no state sales or excise taxes because of its status as a prescription medicine. So… medical marijuana yields no tax income whatsoever there. (However, the state is challenging their status as a nonprofit and is also challenging whether pot brownies constitute a valid way to fill a medical prescription for marijuana.)

Here in Canada the amount of tax is dependent on which Province you live in, as per here:

That is of course assuming you are not growing your own or have a designated grower.

Many proposed laws for legalized marijuana (NOT just medical) classified it with liquor, so that they would apply the same excise taxes that liquor stores pay.

Here in Minnesota, that is 15¢ per gallon for beer, 30¢ per gallon for wine, and $5.03 per gallon for liquor. Or about 1¢ per bottle of beer, 2¢ per glass of wine, and 7¢ per mixed drink.

I don’t understand this. Do they think smoking it would be healther or more medically valid?


Medical marijuana is not a prescription medication. You don’t get a prescription for it, you get a recommendation. Because marijuana is a Schedule I drug, it cannot legally be prescribed in the US and any doctor that does write a prescription for it may run into problems with the DEA.

It is not much different than Tylenol or Advil and those remedies are normally subject to sales tax.

A gallon of marijuana is a heck of a lot though :slight_smile:

Here’s the cite for the attempted nonprofit. Medical marijuana group is denied a business license in Marysville |

Prescription might have been the wrong word - I don’t know the finer points of the medical marijuana laws, especially when there seems to be so little agreement on it. But Washington tax law does exempt from tax many herbs and supplements from tax, if taken under the instructions of a doctor. This helps naturopaths and herbal medicine practitioners here and is clearly what the nonprofit was trying to get at in their nonprofit application when they listed their product as “holistic, herbal, alternative, organic remedies.”

Oakland, California taxes medical marijuana sales at 1.8 percent of gross receipts.

Not wanting to start a Great Debate on this, but the argument for tax dollars always seemed strange to me. Beer, wine, spirits, and cigarettes are all taxed, but there are plenty of people who brew their own beer and wine at home, which presumably is allowed and cannot be taxed. Hard liquor and cigarettes aren’t generally made at home, however, due to enforcement, but I suspect it also has to do with the fact that the processes involved are a bit more complicated such that getting started would be a bit complex.

The presumption that if marijuana is legalized, everyone will go out and buy a heavily taxed product in stores seems faulty to me. It is an easily grown weed, and I would think given the collective internet knowledge about it’s cultivation, ability to get seeds for potent strains, and general feeling of people wanting to avoid paying taxes, most people would go with a ‘home brew’ approach and do it themselves. Or get it from people who do at much cheaper prices. I assume this would fall under whatever laws allow you to make your own beer and wine. Have estimates been made as to how many people will actually buy marijuana if it is legalized, and of those, how many will buy it from legitimate sources where taxes can be collected? I presume they expect to heavily tax it to make up for revenue shortfalls in states like California, but won’t that cause an even greater number of people to go the ‘home brew’ route where the government doesn’t get a cut?

This is not accurate anymore. Marijuana was taken off the FDA Schedule I designation earlier this year or late last year, that is what opened the doors here in Colorado to get it legalized in several municipalities [Breckenridge and Nederland].

I’ll dig for a cite on the FDA ruling. But I’m sure you can google it.

My understanding was [having been to a few town council meetings] that municipalities were making a lot more off the dispensaries than previously thought - so if it is not a federal sales take it could be a local one. I know Breckenridge Colorado could see an end to their budget deficit within 1 fiscal year.

Why is it an either/or thing? I could see a lot of smokers taking a stab at growing the stuff themselves and - because it takes a while, because there’s a learning curve to grow anything decent, because any agricultural product can be affected by disease or insects, because, because - also running out to the 7-11 or whatever and buying a little as well.

Do you think people who homebrew nevereverfortherestoftheirlives buy a 6-pack at the store?

Medical marijuana is subject to the state sales tax in Colorado, 2.9%. Many cities are now adding the city sales tax as well, or a special tax specific to medical marijuana. It averages out to between 6 and 8%.

In California it isn’t taxed statewide, or if it is, the tax isn’t itemized to the consumer. Although the MMJ advocates are overwhelmingly in favor of general legalization for adults, some have expressed concerns about Proposition 19 due to the fact that it would encourage the taxing of MMJ. On the other hand, if the RAND Corporation’s estimate that prices would fall on the order of 80% in the event of legalization, I’d say the patients don’t have a thing to worry about. There’d be a lot of room for taxation there, while the customer could still feel he was getting a bargain.