In November 2016, Maine voters approved the legalization of marijuana for recreational use, along with its retail sale and taxation. A part of the law, which allows Mainers aged above 21 to grow six mature plants and possess 2.5 ounces of marijuana at a time, came into effect on Jan. 30, 2017. Besides stipulating a tax of 10 percent on marijuana, the original law mandated a statewide cultivation limit of 800,000 square feet, which was subsequently removed in July 2017.
On Jan. 27, 2017, lawmakers deferred the enactment of sections of the law relating to retail sales and taxation until Feb. 2018. The move gives the Joint Select Committee on Marijuana Implementation, responsible for creating the regulatory structure, sufficient time to resolve issues and close loopholes. After several deliberations, the committee has proposed to levy a 20 percent tax on recreational marijuana, comprising a 10 percent wholesale tax (or excise tax) and a 10 percent sales tax. In addition, the state will distribute 5 percent of all taxes to host communities – facilities which host the cultivation or retail sales of marijuana. The new taxation structure will increase the per-ounce price of marijuana from the current average of $200 to around $240. The price will include a $20 excise tax charged to the cultivator and a $20 sales tax levied on end consumers. Host communities will receive $2 of the $40 tax.
Tax rate deemed competitive with other states and illicit market
David Boyer, Maine political director of the Marijuana Policy Project (MPP), considers the tax rate of 20 percent low enough to be competitive not only with states such as Massachusetts (which taxes marijuana at similar rates) but also with the illicit market. He adds that municipalities should also receive a share of the tax revenues. The proposed higher taxes have been praised by legalization advocates who feel that the rates are competitive and that part of tax revenues will flow back to communities.
Maine’s 20 percent tax on recreational marijuana is likely to generate a minimum revenue of $21 million in the first full year of operations. This excludes $1.5 million in taxes from retail sales of medical marijuana. It also excludes sales or prepared food taxes, paid by medical marijuana caregivers, which is collected by the state but not monitored separately. Based on recreational marijuana demand in Colorado and Washington, the nonprofit Tax Foundation estimates that Maine can generate $29 million in potential revenue from the proposed tax rate.
The new proposal will not affect medical marijuana which will continue to be taxed at 5.5 percent for retail sales and 8 percent for edibles. Although some committee members were in favor of taxing recreational and medical marijuana at similar rates, caregivers protested keeping in mind consumer affordability as well as the overall viability of the medical marijuana industry. The 10 percent excise tax may be levied on product volumes instead of the price to facilitate stable revenues once wholesale marijuana prices drop, as observed in other states after the legalization of recreational marijuana.
Dealing with addiction
Marijuana is a highly addictive drug which can produce outcomes similar to other street drugs, alcohol or tobacco. Addiction to marijuana is quite easy and it can be extremely harmful if left untreated. If you know someone battling addiction to marijuana or other substances, it is advisable to seek immediate help.
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