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States Vary in Tax Treatment Of Medical, Recreational Marijuana

Tuesday, December 3, 2013
By Martha Kessler and Tripp Baltz

Nov. 29 -- Slightly more than half the states that have authorized the use of medical marijuana impose a tax on sales of the substance, but the amount of revenue generated so far has been low and has generally been used to cover the cost of administering the program or to fund other public health priorities.

A recent survey by Bloomberg BNA found that, of the 20 states that have legalized the use of marijuana for palliative purposes, 13 impose some form of tax, four specifically don't have a tax, and the tax situation in three other states remains unclear at this time.

In addition to activity in the states, the District of Columbia also permits the sale of marijuana when prescribed by a physician and has imposed a 6 percent sales tax on its sale since the program was launched in 2010.

Colorado and Washington have also legalized recreational marijuana. The potential for new major streams of revenue from those sales--much higher than those from the sale of medical marijuana--were a major selling point for legalization, according to the National Conference of State Legislatures.

However, estimates of the revenues likely to flow into state and local government coffers because of legalization of marijuana vary widely, NCSL said.

The argument that a state can receive fiscal benefits from a new source of tax revenues hasn't held as much weight with voters and state legislators as the argument that certain patients are deserving of the health benefits they can get from marijuana use, Mason Tvert, spokesman for the Marijuana Policy Project in Denver, told Bloomberg BNA.

“Tax revenues can play a role, but not as much as the compassion and common sense” of states deciding to permit use of medical marijuana, he said.

With assistance from Adrianne Appel, Mike Bologna, Lorraine McCarthy, Nora Macaluso, Bill Carlile, Mike Bologna, Laura Mahoney and Jeff Day.

To contact the reporters on this story: Martha Kessler in Boston at mkessler@bna.com and Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com

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