Ever wonder what other states pay in taxes on cannabis products? The non-profit Tax Foundation has done an analysis of cannabis taxes on states where it has been legal for recreational sales.
It may feel as if taxes in California are high, but in a state like Alaska, where this is no state-wide sales tax, the $50 per ounce levy must feel high.
California is subject to an ever changing tax landscape and starting this year increased its retail markup value – the percentage used to calculate what distributors must collect from retailers – to 80%. These costs get passed along to customers who also pay the local sales tax rate on the products they purchase along with the local marijuana excise tax imposed by the municipality where the dispensary is housed.
When Illinois made recreational sales legal this year they started with a graduated tax system where products are taxed higher based on potency. Even still, they ended up with one of the highest tax rates, topped only by Washington State whose rate is over 43%.
Other states like Massachusetts, Colorado, Oregon and Michigan’s state excise tax hovers around 17%. But, of course, on a state by state and municipality by municipality there are other imposed tax burdens along the supply chain that affect the retail price to customers.
One thing is certain, the taxing landscape is shaping up to be uneven and burdensome in some places, mirroring the convoluted nature of the tax system on beer, wine, spirits and cigarette and nicotine products.