Posts in category legalized cannabis

Study estimates $28 billion in tax revenue for the US per year with nation-wide legalization of marijuana

A medical marijuana dispensary in Colorado (O'dea)

A medical marijuana dispensary in Colorado, where tax revenue are expected to double initial estimates (O’Dea)

A study by the US-based Tax Foundation finds that the four US states that have legalized marijuana have collected more tax revenue than they had initially estimated. The Colorado government is anticipating revenues of $140 million, which is double the initial $70 million estimate. Washington’s state government meanwhile is estimating tax revenue as high as $270 million per year.

State governments could expect to raise between $5 billion and $18 billion in total if they all legalized and taxed marijuana, says the study.

The study says that state and federal governments could levy a number of taxes on the national marijuana market, including a federal excise tax similar to what is collected from cigarettes, which would raise $500 million in revenue and a 10 percent sales surtax, like that collected in Colorado, which would raise $5.3 billion if imposed nation-wide.

Business income from the marijuana sector would additionally raise nearly $5.5 billion in federal revenue and $1.5 billion in state and local revenue. The study cautions however that this revenue could fall as competition drives down prices and total business revenue in the marijuana sector.

Other sources of government revenue opened up by legalization include individual income and payroll taxes from employment in the marijuana industry. These sources of revenue may increase as production ramps up, the study estimates.

The study predicts that prices and profit margins will fall drastically when marijuana is legalized, as a result of the much lower risk premium attached to production of marijuana once it is legal.

While some rights activists point to the repression inherent in taxation of voluntary transactions, most welcome the shift from wholesale prohibition of marijuana, to regulation and taxation, as a lifting of the degree of repression placed on the marijuana sector. All major marijuana advocacy organizations in the US meanwhile are supportive of the growing trend toward legalization and taxation of marijuana, and regularly tout the benefit of legalization on local, state and federal tax revenues.

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Australia legalizes medicinal cannabis

A hemp plant. The cultivation and production of medicinal cannabis was legalized in Australia on February 24 2016 (Hendrike)

A hemp plant. The cultivation and production of medicinal cannabis was legalized in Australia on February 24 2016 (Hendrike)

Australia has become the most recent Western nation to legalize medicinal cannabis after legislation was passed on February 24, 2016 by the Australian to legalize cannabis for medicla purposes.

Health Minister Sussan Ley described the legislation as the “missing piece” needed to provide Australian patients with a reliable source of legal medicinal cannabis for managing chronic conditions.

The legislation, which received bipartisan support in Australia’s parliament, will create a national medicinal cannabis regulator to oversee the cultivation of cannabis and the manufacture of medicinal cannabis products from the cannabis plant.

Commenting on the passing of the legislation, Ms Ley said:

“This is an historic day for Australia and the many advocates who have fought long and hard to challenge the stigma around medicinal cannabis products so genuine patients are no longer treated as criminals.”

“This is the missing piece in a patient’s treatment journey and will now see seamless access to locally-produced medicinal cannabis products from farm to pharmacy.”

Ms Ley added that the amendments to the Narcotic Drugs Act are consistent with Australia’s international obligations under the Single Convention on Narcotic Drugs.

The Health Minister added that the new legislation would not make cannabis legal for general cultivation or recreational use.

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