A Senate committee has zeroed in on a 25 percent tax to be charged for legalized marijuana, as lawmakers consider legislation to allow sales starting in 2018. The Senate Finance Committee is expected to vote on the tax by the end of the week.
The tax — along with fees that would be charged to those growing, testing and selling marijuana — would bring in an estimated $6.9 million in 2018 and $14.4 million in 2019, according to the legislature’s Joint Fiscal Office.
Senate Finance Committee chair Tim Ashe (D/P-Chittenden) said the estimates are conservative and are made on the premise that the state would permit 25 retail stores, 15 small cultivators and 10 large cultivators in the first year, with more the next year.
The 25 percent tax is the same rate that Oregon started charging this year, Ashe said, but less than the 37 percent Washington state charges. The Vermont proposal would be an excise tax charged on marijuana sales made at stores that sell marijuana.
The rate at which marijuana is taxed is a key decision, which will influence whether a legal market can compete with the black market while still raising enough money to provide the drug counseling and policing that advocates have promised.
But there are questions about whether the marijuana legalization bill will even reach the Senate floor this year, let alone make it to a more reluctant House chamber.
As it stands, the bill lacks support to pass the seven-member Senate Appropriations Committee, which is scheduled to start considering the issue next week. All eyes are on Sens. Jane Kitchel (D-Caledonia) and Diane Snelling (R-Chittenden), two members who say they have concerns about legalization, but haven’t decided how they’ll vote.
Both Kitchel and Snelling are likely needed for the bill to pass out of Senate Appropriations. “The key vote is going to be in there,” said Senate President Pro Tempore John Campbell (D-Windsor), an Appropriations Committee member who opposes legalization.
Asked if her vote is a key to the bill’s future, Snelling said, “That’s what I’m being told.”
Snelling met Wednesday with lobbyists representing the pro-legalization Marijuana Policy Project, but came away still uncommitted. “I’m not there yet,” she said. “I’m worried about the kids.”
On Wednesday, Kitchel, the Appropriations Committee chair, met with Gov. Peter Shumlin’s staff. “I haven’t really made a decision yet,” she said afterward, citing public health and safety concerns.
Three members of the committee — Sens. Alice W. Nitka (D-Windsor), Robert Starr (D-Essex/Orleans) and Campbell — have all indicated they oppose legalization.
There are ways for the bill to advance without a majority vote. A member who opposes the bill might be persuaded to vote in favor, so that the full Senate can have the debate. Or the committee could choose to send the bill to the floor with a negative recommendation.
Other concerns about legalization continue to circulate in the Statehouse. The Senate Economic Development, Housing & General Affairs Committee has been grappling with whether the rules surrounding employee drug testing are sufficient to protect employers. The Senate Transportation Committee has been hearing a slew of concerns from police agencies.
This week, Shumlin administration staff unveiled a plan to the Senate Finance Committee that jettisons an earlier plan to add eight new troopers in 2017 — delaying that until 2018.
Finance Commissioner Andy Pallito also presented a plan by which a small amount of the estimated $2.21 million start-up costs for administering legalized marijuana would be spent in 2017 with money borrowed from 2018. That’s potentially an unprecedented approach.
Asked about it this week, Shumlin didn’t defend the plan. “You don’t have to do that if you don’t want to,” he said, turning the decision back to legislators. “If they want to make different choices, they can.”
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In all do respect to the government of Vermont. 25 % to legalization is absurd. Next thing is that you can’t compete with a black market because those who sell or import cannabis have no over head. Many of them who are black market growers can make there own prices. If someone or a group of people grow on a large or small scale theyou have only there investment and the return on it. They don’t have a overhead of taxes. If they choose to sell 1 pounder of cannabis at 2000 dollars they can. If the person who purchased it cares to sell it by the oz at 275 or 250 to cover the cost of the original 2000 dollars they can. Vermont government can’t compete with the black market especially when it has banned home growers from the bill..
Then the fact that they have not address the problems with the medical cannabis program. It is sad that vermont government is far more dangerous to the patients on the Vermont marijuana registry because they have not advanced the medical cannabis program in any way shape or form. They are concerned about getting money to fund a criminal reform bill rather than fixing the medical cannabis program first. Patients before taxes and regulations on cannabis which is truly prohibition disguised as legalization by taxing cannabis and regulations on it. Vermont Marijuana policy project has a huge lobbyists pushing a Washington DC agenda a national agenda. Look at the other States that have legalization and only one has been successfully with out major impact from Mpp that is Colorado..Washington state has a failed medical cannabis program due to legalization now. Oregon has issues. Alaska is doing well without Mpp. In Maine they have the best regulated medical cannabis program in the USA and Marijuana Policy project is trying to screw it up. In New Hampshire after years of Matt Simon of Mpp being there they still have no medical cannabis program. Don’t let Mpp or Vermont cannabis collaborative or dictate the cannabis industry.
Keith, unfortunately your comments just don’t add up. MPP was not involved at all in Washington state’s initiative. MPP was, however, the main organization behind both Colorado and Alaska’s reforms (which you seem to think were great). It’s also unfortunate that you think I am personally to blame for the failures in New Hampshire — a more obvious person to blame would be former Gov. John Lynch, who vetoed good medical marijuana bills in 2009 and 2012, or current Gov. Maggie Hassan, who threatened to veto the bill in 2013 if it wasn’t essentially rewritten to appease a few police chiefs.
This is why legalization isn’t great for marijuana users. They’ll pay a lot more. Of course, there’s the benefit of not being criminalized in the purchasing process, but that hasn’t been a real concern for some years. A second reason not to legalize… if a cop smells it on you, in your car, you’re getting a DUI. It’ll be up to you to somehow prove you weren’t under the influence.
Without giving the option to grow your own, it’s not legalization; it’s just another prohibition bill.
Please go to Washington State who also had a 25% tax. No one made money but the state. You couldn’t give away your dispensary in there for most of them remain only in the illegal sector for survival. The state had to change the tax the very next legislative session or there would be no legal marijuana dispensaries in the state
Whether 25% is an absurd rate remains to be seen. It has everything to do with what the cost of the actual product will be. Up until now, the price has had little to do with the actual cost of producing it–it’s been based solely on what the market will pay and the black market automatically limits competition, creates scarcity and often introduces multiple middlemen/women. In Colorado last year they sold $1 billion of product and they collect tax revenue through a combination of a 15 percent excise based tax on the average wholesale market rate; a 10 percent state tax on retail marijuana sales; a state sales tax of 2.9 percent; varied local sales taxes; and local marijuana taxes such as a 3.5 percent tax in Denver. That’s way more than 25% and yet they did a billion dollars worth of sales.
An additional note about how they do it in Washington State: they collect tax revenue through a 25 percent tax on producer sales to processors; another 25 percent tax on processor sales to retailers; another 25 percent tax on retailer sales to customers; a state Business & Occupation (B&O) gross receipts tax; a state sales tax of 6.5 percent; and varied local sales taxes. The total effective tax rate to be about 44 percent because of how many times it gets “stepped on”.