Excise Taxes and Cannabis – What Does It Mean For Cultivators, Consumers and Packagers?
Under the taxation framework, any licensed cannabis producer will have to bear a federal exercise duty. They should bear this as and when the cannabis products that they packaged reach the customer. Here, the customer denotes not just individual customers, but also a retailer/distributor, who is provincially authorized by the manufacturer.
Excise Stamp:
Producers of marijuana should remember that there should be an excise stamp on all the cannabis products that they have produced legally and are available for shopping by customers. When it comes to Canada, only a person with the license issued by the Canada Revenue Agency can purchase cannabis excise stamps. This rule differs from one state to another. In Canada, the CRA is responsible for licensing not just cultivators and producers, but also packagers of these products. The CRA is also responsible for gathering federal taxes and duties. For the retail sale and distribution of weed, the appropriate Territorial and Provincial Governments will be responsible.
What does excise duty mean for packagers, producers and cultivators?
Not just the producers, but also the cultivators and packages will have to obtain the cannabis license from the CRA in Canada before they produce. To qualify for the CRA cannabis license, the applicant will have to get a license from Health Canada. Once they get the required license, they will have to shop and apply cannabis excise stamps on their products if they take care of the packaging. Also, they should calculate the duty on their sales. Further, they are responsible for filing their return and remitting the excise duty to the CRA.
How about consumers?
In Canada, the consumers shopping for weed products will have to pay the applicable HST/GST based on the territory or province, where they buy the product. They can ensure that they buy only legally produced marijuana by verifying that the product has the appropriate cannabis excise steam. When talking about the cannabis excise stamp, each state will have a different color stamp for products that are sold in the appropriate jurisdiction.
Is marijuana legalized in the United States?
Even though the federal law prohibits the sale of marijuana in the United States, seven states in the country have legalized the sale of weed and they are Washington, Oregon, Nevada, Massachusetts, Colorado, California and Alaska. Of course, it is legal in Vermont and Maine states as well. However, these states have not established a tax system so far. In November 2018, voters from Michigan approved taxable and legal marijuana. When it comes to the District of Columbia, it has been legalized. However, Congress presently prevents that city from regulating and taxing sales.
How to marijuana taxes differ?
In most states of the United States, Marijuana is taxed as a percentage of the retail cost. These rates generally range from 10 percent in Nevada to 37 percent in Washington. The other states also use these taxes similar to the tax from retail sales of other products, where the retailer takes care of the responsibility of remitting the state tax.
How do states use the revenue from cannabis?
The 7 states use the revenue they get from excise taxes on cannabis, in the following ways:
- Washington dedicates the income to health care programs
- Oregon diverts the revenue for treatment programs, drug prevention, education and also transfer some percentage to the local governments.
- Colorado uses it for educational programs
- Nevada sends the funds to educational programs and for rainy day fund
- Various public safety funds benefit from the marijuana funds in Massachusetts
- In California, the funds are used for administrative costs connected with marijuana legalization. Then, the excess funds are used for youth programs, education and economic development.
- In Alaska, half of the revenue is used for the general fund and remaining is used for programs that aim at bringing down repeated criminal offenses.