Report Released on Fed Gov’t Taxing Marijuana

The Congressional Research Service (CRS) released a comprehensive report last week examining a wholesale excise tax on the production and sale of cannabis-related products by the federal government.

The report was one of the most comprehensive policy and fiscal reviews to date of how marijuana can and should be regulated and taxed. The CRS considered enforcement, restrictions, labeling, measurement, discouraging youth use, choosing the base to tax (i.e., weight, potency and price), special tax rates, home production and medical cannabis.

In the CRS’ analysis, they predict that cannabis prices are likely to fall to as low $5-$18 ounce, from the $200 – $350 prices per ounce in dispensaries today. Their economic modeling was based on a $40 billion annual cannabis market in the United States and they estimated the federal government could generate as much as $7 billion in federal excise taxes.

NORML Executive Director Allen St. Pierre commenting on the new CRS paper:

“This CRS report on the prospects of the federal government taxing and regulating cannabis is another clear indication of the political saliency and fiscal appeal of ending cannabis prohibition at the state, and increasingly at the federal level (replacing the nearly eighty-year old failed federal policy with tax-n-regulate policies that are similar to alcohol and tobacco products).

With fours states and the District of Columbia since 2012 opting for legalizing cannabis, dozens of members of Congress from both major political parties—from states with legalization and those that pine for it—are getting serious about making sure the federal government does not lose out on hundreds of millions annually in tax revenue from the ever-growing cannabis industry in the United States.”