A sticking point within the over one-hundred fifty pages of legislation introduced by Senator Schumer has become the proposed tax rate of this huge bill.
The idea is to start with a modest 10% federal tax on marijuana sold, that would then bump up every year until it reaches 25% in five years after enactment. This twenty-five percent is added along with whatever state and local taxes are already in place, which reach up to 35% in some places.
Clearly, these numbers aren’t very feasible.
“Man, 25% is a high rate,” says Nick Richards, a partner at a marijuana law firm in Denver. “That doesn’t seem to be cheaper for the industry. And I think that rate leaves plenty of room for the black market, perhaps more headroom for the black market than even now under 280E.
“That piece doesn’t seem to be super well-thought-out.”
There is an exemption available for small businesses, where they can apply for a 50% reduction in taxes, but the rate will still be higher than most customers are used to, and fear for a more competitive and cheaper black market emergence is growing.
Then, there is the bill swimming around the House that treats taxing differently. The MORE act, introduced by Representative Nadler, would begin with a 5% tax rate that eventually increases and caps at 8%.
Schumer’s bill is in the discussion phase, where public discourse is open until September. It’s expected the bill will change form in small ways, and hopefully this will be an area that we find to be malleable. A co-sponsor of the bill, Ron Wyden, is well coursed in tax policy, so hopefully his ears will be well tuned to the chorus of concern coming from the industry.
Read the original story at MJBizDaily.