- Marijuana legalization is unlikely but the proposal shows interesting tax implications
The short answer: No. The MORE Act 2019 —Marijuana Opportunity, Reinvestment and Expungement Act— looks to take a bit hit in the current Republican-majority-held Senate. And with the U.S. historically not having shown much interest or progress towards the legalization and decriminalization of marijuana use, it appears the legislation will go up in smoke.
Several states have legalized recreational and medicinal cannabis, seeing interesting tax implications. Almost all legal states apply an excise tax based on price, weight, and/or potency. In early 2020, it was estimated that states would rack in somewhere near $1.8 in excise taxes; the effect of COVID-19 might only raise this number.
But what could the nationwide legalization of marijuana mean for the country? According to the Congressional Budget Office (CBO), the proposed bill “would increase revenues, on net, by about $13.7 billion over the 2021-2030,” drawing somewhere near $8 billion from business taxes like payroll and income taxes and about $5.7 billion from excise taxes alone.
Estimates from 2019 suggested that the legal marijuana market at the time was worth up to $13.7 billion with some estimates for the full marijuana market—that traded legally and illegally—ranging from $40 to $60 billion.
The MORE Act “is an attempt to move illegal trade into a legal marketplace—much like what happened in the early years after the end of Prohibition,” according to Tax Foundation.
Share your thoughts with us via email or give us a call 516-541-6549 and visit our website for more news and information on our services.
Sincerely,
Devin McQuillan
Associate, Creative Solutions
Contact:
516-541-6549 | Email