What does potency have to do with taxing marijuana? Ask the lawyer

Q: Marijuana legalization is becoming ever more prevalent and with it, tax policy is coming into focus. Is potency really a consideration for taxes on marijuana?

-M.G., Los Feliz

Ron Sokol

A: Recently, New York passed a law that will tax recreational marijuana based on the amount of THC (the primary component of marijuana that is intoxicating). Research shows that Illinois last year instituted a potency-related tax. Vermont is reported to be limiting THC content when its legal market opens there, and THC limits and/or taxes based upon it are being discussed elsewhere (including in the U.S. Senate’s drug-control caucus). The rationale is to protect public health by discouraging dangerously concentrated cannabis. Note that various states have regulated the number of milligrams of THC that can be in a single serving, package or retail sale, at least with respect to certain pot products. In sum, whether the taxes associated with marijuana will turn even in part on potency, or to what extent, is an emerging issue. There are two other criteria that can come into play with regard to taxing marijuana: Percentage-of-price (the consumer pays a tax on the purchase price, which the retailer then remits to the state), and weight based, similar to cigarette taxes, but instead of taxing per pack of cigarettes, the tax is determined from the weight of the marijuana product.

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Q: What is the current situation of marijuana legalization nationwide?

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-B.C., Torrance

A: Since 2012, 16 states and Washington D.C. have legalized marijuana for adults who are at least 21 years old, and 36 states have legalized medical marijuana. The upshot is that a majority of Americans have access to marijuana, either medically or in various states recreationally.  But marijuana is still considered an illegal Schedule I drug by the federal government. President Biden has indicated he would support federal decriminalization and Senate Majority Leader Chuck Schumer, D-New York, has stated that marijuana reform will be a priority in the Senate this year.

Ron Sokol is a Manhattan Beach attorney with more than 35 years of experience. His column, which appears in print on Wednesdays, presents a summary of the law and should not be construed as legal advice. Email questions and comments to him at ronsesq@gmail.com.

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Source:: Los Angeles Daily News

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