Americans drink a lot more alcohol than they smoke in cannabis. However, due to skewed taxation, government coffers are collecting a lot more money per customer for marijuana.
State and local excise tax collections on retail adult-use cannabis sales surpassed $1 billion in 2018 nationally. That is a 57 percent increase over 2017 levels, according to data compiled by the Institute on Taxation and Economic Policy.
Meanwhile, cannabis misuse is much less costly to society than alcohol. Its medical use could save patients hundreds of millions of dollars currently spent on pharmaceutical drugs.
The most recent nominee for US Attorney General agreed not to pursue state legal cannabis programs. All of this begs the question, why should cannabis users bear the heavier tax burden?
High taxes benefit community, underground market
Annual excise tax revenues on adult-use cannabis sales ($1.04 billion) rivaled those for all forms of alcohol ($1.16 billion), the group reported. State-specific sales taxes on retail cannabis purchases also yielded an addition $300 million in revenue in 2018.
These taxes are often put to good use, such as funding local school construction and programs and for anti-bullying campaigns. However, they also inflate the cost of lawful cannabis to levels that encourage people to return to the traditional, underground market.
Authors of the report estimated that cannabis-specific taxes would raise an estimated $11.9 billion annually if products were legally available at retailers nationwide. Full text of the report is available online.
Meanwhile, two bills have been introduced into the US Congress, HR 420 in the House and S420 in the Senate. If they pass, even more states are expected to legalize cannabis and federal taxes may also be imposed.
NORML Political Director, Justin Strekal, contributed to this report.