January 21, 2016 The Tax Lawyer

Crafting a Constitutional Marijuana Tax

Volume 69, No. 1 - Fall 2015

Nima H. Mohebbi, Samuel T. Greenberg, and Ian S. Speir

Abstract

    Marijuana legalization and decriminalization have become important policy issues.  Twenty-three states have partially legalized marijuana (generally for medicinal purposes), and four – Alaska, Colorado, Oregon, and Washington – have legalized it for general adult recreational use.  Given the likely hyper-growth of the cannabis market due to widespread legalization, states might enjoy budgetary windfalls from collecting marijuana taxes.

    Marijuana, however, remains a federally controlled substance, the sale or use of which is subject to substantial penalties.  For the states, this presents a potential problem in collecting marijuana excise taxes.  If an individual user in a state where marijuana is legal pays an accompanying excise tax, the payment could be construed as admission of federal criminal possession of a controlled substance.

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