THE HIGH POINTS OF MARIJUANA LEGALIZATION AND TAXATION—WHAT TO EXPECT IN 2015

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Last year was all about marijuana legalization—and those efforts will likely continue in 2015. But where will it be legalized next? What kind of taxes are imposed in states where it is legal? Here is a quick review of some of the high points of marijuana legalization and taxation.

Four states have legalized recreational (also known as retail) marijuana sales: Alaska, Colorado, Oregon and Washington. Colorado and Washington began sales in 2014. Alaska may begin sales sometime in 2015 if the regulatory infrastructure is in place. Sales in Oregon will likely begin in 2016. All four states impose excise taxes on marijuana, in addition to sales taxes.

Twenty-three states and the District of Columbia have enacted a medical marijuana program, but most jurisdictions do not tax medical marijuana. Both Illinois and New York impose an excise tax on medical marijuana; however, medical marijuana sales have not begun in either state yet.

Marijuana businesses in states where marijuana has been legalized for recreational or medical purposes may also be subject to gross receipts, business and occupation or other business privilege taxes. Marijuana is also usually subject to state and local sales taxes, regardless of whether the marijuana is for medical or recreational purposes. And marijuana facilities must pay all application and license fees or other fees required before operating legally within a state.

Here’s a non-exhaustive list of marijuana taxes in the U.S. today:

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Soon legalized marijuana could be coming to even more states than those listed above. Just in the first couple of weeks of 2015, as new legislative sessions begin in many states, legislation to legalize marijuana in some form has been introduced in at least four states and in D.C. Below is a brief summary of some legislation introduced so far (not including bills decriminalizing marijuana or making changes to existing programs):

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Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Where do you think marijuana will become legal next? Do you think it should be subject to excise taxes? 

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1. http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/52leg/1r/bills/hb2007p.htm&Session_ID=114

2. http://ballotpedia.org/Washington_D.C._Marijuana_Legalization,_Initiative_71_(November_2014),_full_text

3. http://lims.dccouncil.us/Download/33216/B21-0023-Introduction.pdf

4. https://iga.in.gov/legislative/2015/bills/senate/284

5. http://www.lrc.ky.gov/record/15RS/HB3.htm

6. http://nvsos.gov/Modules/ShowDocument.aspx?documentid=3294