Proposal for additional marijuana "privilege" tax | Arkansas Blog

Friday, February 17, 2017

Proposal for additional marijuana "privilege" tax

Posted By on Fri, Feb 17, 2017 at 11:28 AM

click to enlarge MEDICAL MARIJUANA: The tax man cometh. - WIKIMEDIA
  • WIKIMEDIA
  • MEDICAL MARIJUANA: The tax man cometh.

Rep. Doug House,
who's handling medical marijuana legislation, introduced a bill for an additional tax on marijuana sales today.

The law already provided for assessment of the customary sales taxes on marijuana sales. House's bill would add a 4 percent special privilege tax on the gross receipts of sales by cultivators, dispensaries or other marijuana businesses. If I read this correctly, this would add 8 percent to the cost, counting both a wholesale and retail privilege tax. That's in additional to a state and local sales tax, which approaches 10 percent in some jurisdictions.

House confirms, as I expected, that the additional tax is viewed as necessary to generate revenue sufficient to pay for the cost of regulating the new business. He said he'd used state study of other states to come up with the 4 percent figure, but acknowledges it may be imprecise. "It may be enough. It may be too much." He said experience will determined that. He said sales have been estimated anywhere from $20 million to $80 million, which means the privilege tax would produce $800,000 to $3.2 million. The state sales tax would produce additional revenue.

Because the constitutional amendment that legalized medical marijuana did not include the privilege tax, the legislation amounts to an amendment of the amendment and thus requires a two-thirds legislative vote.



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