Extras on Excise: Marijuana and Marijuana Taxes on the Ballot this Election Day

Marijuana use—whether medicinal or recreational—is one of the most controversial topics in modern politics. This fall, nine states will have measures on their ballots seeking to allow or expand medical or recreational use of marijuana within their state, as well as impose new taxes on it. This primer provides a general background on medical and recreational marijuana legalization in the United States, with a focus on the state-level ballot initiatives for the upcoming election.

The medical marijuana movement started in 1996, when California voters passed Proposition 215 exempting specified patients and caregivers from many criminal laws prohibiting the possession of marijuana. Since that time, 25 states and the District of Columbia have legalized some form of medical marijuana program. Pennsylvania and Ohio became the most recent states to legalize medical marijuana when Gov. Tom Wolf (PA) signed S.B. 3 on April 17 and Gov. John Kasich (Ohio) signed H.B. 523 June 8. Nine of these states currently impose a special excise tax on marijuana businesses or marijuana sales.

A more recent effort has been the push to legalize and tax recreational marijuana. In Nov. 2012, Washington voters passed Initiative 502 and Colorado voters passed Amendment 64, legalizing recreational marijuana and imposing taxes on marijuana cultivation and sales.  In 2014, the trend continued as voters in Alaska passed Ballot Measure 2, Oregonians passed Measure 91 and Washington, D.C. voters passed Initiative 71, also legalizing and taxing marijuana (except for Initiative 71, which legalized marijuana possession only).

The momentum is set to continue, as nine states have some item relating to medical or recreational marijuana on their ballots this fall—more than in any other year.

Recreational Marijuana Ballot Measures


Arizona voters will consider Proposition 205 in November. Marijuana retailers would be subject to a 15 percent excise tax on marijuana sales. The results from this election may be close, as an Oct. 2016 poll conducted by OH Predictive Insights showed 47 percent of Arizona voters oppose Proposition 205, 43 percent support the proposition and 10 percent remain undecided.


Voters in California will decide on Proposition 64. Marijuana cultivators would be liable for a tax of $9.25 per dry-weight ounce for marijuana flowers and $2.75 per dry-weight ounce for marijuana leaves. Marijuana sales would be subject to a 15 percent excise tax. A September poll from the Public Policy Institute of California showed 60 percent of California voters support the initiative.


Maine citizens will consider Question 1. A 10 percent excise tax would be imposed on recreational marijuana sales; medical marijuana would be exempt. Local jurisdictions could also impose privilege taxes on marijuana cultivation and manufacturing activities.  A poll from September conducted by the Portland Press Herald and University of New Hampshire Survey Center showed 53 percent of Maine voters support Question 1, 28 percent remain in opposition, and 10 percent are undecided.


Massachusetts will have Question 4 on its ballot.  Marijuana would be subject to Massachusetts’ 6.25 percent sales tax and retail marijuana would be subject to an additional 3.75 percent excise tax; medical marijuana would be exempt. Local municipalities could add an additional 2 percent excise tax. An October poll from the Western New England University Polling Institute showed 55 percent of Massachusetts voters support the initiative.


Voters in Nevada will consider Question 2. Marijuana cultivation facilities would be liable for a 15 percent excise tax on wholesale marijuana sales. A September poll conducted by Bendixen & Amandi International showed 47 percent of Nevada voters support Question 2, 46 percent remain opposed, and 7 percent are undecided.

Medical Marijuana Ballot Measures


Arkansas will have two separate initiatives related to medical marijuana on the ballot: Issue 6 and Issue 7.  Issue 6 is an initiated constitutional amendment called the Arkansas Medical Marijuana Amendment while Issue 7 is an initiated state statute called the Arkansas Medical Cannabis Act. 

Both Issue 6 and Issue 7 provide for the application of the existing sales tax to medical marijuana. Issue 7 specifies that other taxes cannot be imposed on medical marijuana. But while the initiatives are similar, there are some notable differences. Enacted constitutional amendments, such as like Issue 6, cannot be amended by the state legislature without voter approval.  Enacted statutes, such as Issue 7, however, can be amended or repealed with a 2/3 vote in both the Arkansas Senate and the Arkansas House of Representatives.  Additionally, Issue 7 allows certain patients to grow marijuana at home for medical use while Issue 6 would not. A Talk Business & Politics-Hendrix College survey from September shows mixed support for these initiatives.


In Florida, voters will decide on Amendment 2. If approved, the constitutional amendment would permit residents with specified debilitating medical conditions like cancer, epilepsy or HIV to use marijuana after consulting with a licensed state physician. Marijuana would likely be subject to Florida’s 6 percent sales tax, according to the financial impact statement accompanying the amendment. A September poll conducted by the Florida Chamber of Commerce and Cherry Communications showed 73 percent of Florida voters support Amendment 2.

Constitutional amendments in Florida, such as Amendment 2, must win a supermajority vote equaling at least 60 percent of those voting on the issue. This requirement has proven important, as a 2014 medical marijuana amendment obtained 57% approval from voters, failing to pass because the supermajority threshold was not met.


Voters in Montana will consider Initiative 182 in November. While Montana legalized medicinal marijuana in 2004 via Initiative 148, the Montana legislature amended Initiative 148 in 2011 with S.B. 423, which limited medical marijuana dispensaries to providing marijuana to a maximum of three patients and required state review of doctors who marijuana to more than 25 patients per year. After several years of constitutional challenges to S.B. 423, the limitations went into effect in 2016. Initiative 182 seeks to amend S.B. 423 by repealing these requirements.

North Dakota

North Dakotans will see Initiated Statutory Measure 5 on their ballots. If approved, the statute would permit North Dakota residents with specified debilitating medical conditions like cancer, epilepsy or HIV to possess, use and potentially grow marijuana after consulting with a licensed state physician. The measure does not address whether the state sales tax or other excise taxes would apply to marijuana.

Given the close races in many of these states, voters will likely be paying close attention to results across the nation come Nov. 8.  Stay connected to Bloomberg BNA to see the political, social and financial impacts resulting from these measures.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: What are your predictions for the upcoming ballot measures regarding medical and recreational marijuana?  Will the trend continue with more states adding medicinal and/or recreational marijuana measures to their ballots?

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