Tag: cannabis taxes

Cannabis Taxes Help Local Businesses and Residents During Coronavirus Crisis

Cannabis sales and tax revenue numbers are one of the few bright spots within an American economy that is reeling from the impacts of the coronavirus pandemic. When you support craft cannabis boutiques like Kind Leaf, you are helping support your local community in many ways, from providing jobs to your neighbors to helping fund various social programs that benefit your city, county, and state.

Unfortunately, the global health crisis has caused an economic collapse unlike anything that we’ve seen since the Great Depression. While many industries wonder how they are going to survive, cannabis commerce appear poised to remain strong. As government’s look for solutions, utilizing cannabis tax revenue effectively should be a part of any sensible policy proposal. Trinidad, Colorado, implemented a rainy day fund to assist local businesses and residents, a program that should be an example for other governments to follow, as Westword reports:

The southern Colorado town, fewer than fifteen miles from the New Mexico border, has used $100,000 in marijuana tax revenue from Trinidad’s 25 dispensaries to provide utility stipends for residents, as well as $300,000 for rent and utility relief for local businesses and $100,000 for extra funding split between the town’s hospital and the Las Animas County Health Department to fight COVID-19.

Trinidad economic development coordinator Wally Wallace says that one-third of local marijuana tax revenue is set aside for a “rainy-day fund,” which has been flush over the last several years. After COVID-19 spread across Colorado, Trinidad staffers feared that a drop in tax revenue during the first quarter of 2020 was inevitable — but Trinidad dispensaries broke a sales record during that period, putting $853,000 in tax revenue at the city’s disposal right after statewide stay-home orders were implemented.

“We’ve been setting aside money for that rainy-day fund for a while, which has been fantastic. When COVID-19 came in, we were trying to figure out how to react and help our local businesses while the federal and state governments were still trying to do the same,” Wallace says. “We understand this pandemic is still going on, and we still might see some drastic changes. People maybe were panic buying early on, but that being said, we’re still shocked about the lines outside of dispensaries right now.”

Over 100 neighborhood businesses have been assisted by the relief fund and local residents can apply for up to $250 for help making utility payments during these trying times. As circumstances change over time, cities and states should adapt to various needs and be flexible with cannabis tax revenue. Of course, these officials should be doing all that they can to help the cannabis industry thrive, including adding their voices and resources to federal lobbying efforts around fair banking and tax laws.

When you shop at Kind Leaf, you get to select from the biggest and best selection in the Great Northwest AND you’re helping a small business that truly benefits the local community.

Just Say No to Higher Cannabis Taxes

Operating a licensed and regulated cannabis business is an extremely tough endeavor. After working towards drug policy reform for about 20 years before living in a state with legal cannabis commerce among all adults, I have received a crash course in the last four years about the ins and outs of running a cannabis business from clients, friends, and regulators. The truth of the matter is that profiting from legal cannabis sales is an extremely difficult task because of regulatory hurdles and tax burdens. The federal 280e tax code that prohibits cannabis entrepreneurs from deducting normal business expenses (rent, payroll, etc.) is the most damaging. High (I know, pun intended) taxes on cannabis are another serious barrier, making prices unaffordable for those with lower incomes, and encouraging people to shop on the illicit market.

California, already hurting businesses with a heavy tax burden, are raising taxes even further. The Golden States should reverse course, and other states should not follow suit, they should look to go in the opposite direction and keep taxes law to benefit local businesses and allow the regulated market to keep pace with the prices in the unregulated economy. The San Jose Spotlight reported on the tax hike:

The California Department of Tax and Fee Administration “stunned and outraged” the business side of California’s cannabis market when it announced in November that taxes would go up in January, the California Cannabis Industry Association said in a statement.

The association said California adding more taxes, as the state’s nascent recreational cannabis market “spirals towards collapse” would “drive consumers to the illicit market at a time when illicit products are demonstrably putting people’s lives at risk.”

California collects a 15% excise tax from cannabis consumers and San Jose collects an additional 10%. Every transaction also includes a sales tax that is at least the 9.25% charged by the state on all consumer transactions and maybe more when cities and counties have their own sales taxes. Those rates will remain the same in 2020, but retailers will face a 12.5% bump in taxes and farmers will see an increase of more than 4%.

Like many consumers, the cannabis community is very price conscious. Further, cannabis consumers are comprised of many patients on limited incomes and with plenty of people that know how to acquire flower and other products through underground connections. Too heavy of a tax burden will disproportionately hurt sick and disabled patients and mom-and-pops, as the wealthy and multinational companies can easily handle price increases.

Keeping taxes low will better help everyday citizens and the small businesses that truly power and invest in our local communities and neighborhoods. California was the first state to legalize medical cannabis and I’m pleased that they helped show the way, but let’s not follow the state’s example on taxes, unfortunately, as the Golden State is going completely in the wrong direction.