This week, California Senator Mike McGuire introduced the Marijuana Value Tax Act
; a bill that would nail a 15% tax onto California marijuana sales. In the wake of last year’s California Medical Marijuana Regulation and Safety Act
, a proposed tax increase was anything but unexpected. The Marijuana Value Tax Act couldn’t have been drafted by more experienced hands. Sen. McGuire represents the counties most infamous for Northern California’s historically rich cannabis industry. But tax increases, though at times necessary, are rarely met with a standing ovation and the taxing of a commodity deemed medicinal may find the Marijuana Value Tax Act under heightened scrutiny.
Dividing Up Tax Proceeds from California Marijuana Sales
The Marijuana Value Tax Act is estimated to add $100 million in revenue to state coffers through California marijuana sales, but how will these proceeds be divided? According to Sen. McGuire, the California marijuana tax would find 30%, the biggest slice of the pie, going to the state’s general fund with another 20% going to California parks, 10% doled out to the state’s Natural Resources Agency
, and 10% reserved for substance abuse treatment programs as distributed by individual counties. There’s no question that California is hurting in the financial department so expecting cannabis sales to completely get a pass on an increased tax is naïve. But with a whopping 30% of an annual $100 million tax going into the California General Fund, it’s hard not to want a bit more detail on where those tax dollars are going. Reading further into the language of the bill, it’s “clarified” that the remaining 30% would go to the Bureau of Medical Marijuana Regulation
who would then determine how to use the tax money. Suggested examples include funding law enforcement agencies and city organizations tasked with overseeing marijuana regulation.
How to Get Away With Taxing Medicine
The concept of taxing medicine is even more controversial. The Marijuana Value Tax Act would render cannabis as the first prescription drug to be levied with a tax in California. Many patients who rely on marijuana for its medical benefits feel that taxing California marijuana sales discredits the drug’s healing properties and trivializes their reliance on its affordable availability. But backers of the Marijuana Value Tax Act draw parallels between similar taxation in Colorado, citing an increase in medical marijuana users following recreational legalization. Sen. McGuire also points out that federally recognized prescription drugs are distinctly different from doctor-recommended marijuana prescriptions, adding, “I’m not saying it’s right but there has to be a clear distinction.”
The High Cost of Legalization
Like it or not, this may be the cost of marijuana legalization in the Golden State. Proponents of recreational cannabis have shown a lot of faith in the Marijuana Value Tax Act as a means of finally ushering in recreational marijuana in California. The vague points and blind spots in the proposed division of $100 million annually is nothing new. Under establishment rules, this is simply the price of admission. Sen. McGuire’s bill presents these percentages and couples them with bountiful projections of a financially rebounding state. We’re presented with the promise of chipping away at a $1 billion maintenance backlog for state parks, restoration of cannabis farm-damaged land and waterways, and a streamlined, efficient regulation system.
The Marijuana Value Tax Act is not the law yet. In order for the 15% California marijuana tax to be instated, 2/3 of California’s Senate and Assembly must vote in its favor. Convincing Republicans to vote for a tax increase has been difficult in the past and this could be exacerbated by the fact that cities and counties would have the right to pile on additional taxes atop the base 15%. However, Republican support of the California Medical Marijuana Regulation and Safety Act has built confidence in supporters of the Marijuana Value Tax Act. Now recreational users find themselves confronted with the increasingly complex question “What is the price of California marijuana legalization?”