Michigan, NJ turn to marijuana for tax revenue, nevertheless they’re not charging enough

Michigan in addition to also completely new Jersey are poised to have some of the lowest marijuana tax rates inside country, which has sparked a debate about the best taxation strategy.

Sales in Michigan will be subject to a 10 percent excise tax in addition to the standard 6 percent sales tax. The proposed bill in completely new Jersey imposes a 12 percent sales tax, in addition to also municipalities who host marijuana businesses can impose up to one more 2 percent tax.

The first two states to legalize recreational marijuana, Washington in addition to also Colorado, imposed a 37 percent sales tax in addition to also a 30 percent combined excise in addition to also sales tax, respectively.

Tax revenue in Michigan “which may come via This particular initiative will be far less than one half of one percent of the state budget,” said Scott Greenlee, president of anti-legalization group Healthy in addition to also Productive Michigan, in a statement released after the election.

“The people may have voted on the concept of legalizing marijuana, nevertheless they probably wouldn’t mind more money going to the roads in addition to also schools than the pockets of the pot business,” wrote columnist in addition to also author Mitch Albom in an op-ed for the Detroit Free Press criticizing Michigan’s tax rate.

completely new Jersey Gov. Murphy is usually a proponent of a 25 percent tax on recreational marijuana. On the campaign trail, he touted potential tax revenues of $300 million via legalization, which is usually only attainable having a 25 percent tax.

On the different hand, Senate President Steve Sweeney pushed for the 12 percent tax which is usually included inside current bill. This particular is usually yet to be determined what the tax rate inside final legislation will be.

“I believe This particular is usually a reasonable in addition to also responsible rate which is usually fair to the consumers in addition to also will generate adequate revenue to support the regulatory system,” he said. “We want to be competitive with different states in addition to also This particular is usually important which we put the illegal drug dealers who want to continue to sell marijuana out of business.”

Supporters of lower tax rates argue which steep taxes will only drive consumers towards the black market.

“A high tax rate doesn’t do much to incentivize the consumer to use legal businesses,” said Josh Hovey, spokesperson for Michigan’s Coalition to Regulate Marijuana Like Alcohol, which advocated for legalization, in an interview with CNBC.

California, which legalized recreational marijuana at the beginning of This particular year, imposes a statewide 15 percent excise tax in addition to sales in addition to also municipality taxes which can reach 20 percent.

According to a survey conducted by cannabis delivery platform Eaze, one in all 5 Californians still purchase cannabis via the black market. The survey also found which a 5 percent reduction inside tax rate could convert 23 percent of consumers via the black market to the legal market.

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