This is an article designed to inform readers about the effects of cannabis sales on taxation. This sponsored article is brought to you by Bojana Petkovic via LoudCloudHealth.
What You Need to Know About Cannabis Taxes in 2020
The cannabis industry is still new in the field, but it is getting bigger by the minute. The battle for legalization— as well as medical research— is opening new doors for all cannabis businesses and their consumers, creating an empire that is expected to be worth astounding $66.3 billion by 2025.
And that is not all. The cannabis market is expected to grow at a rate of 30% per year, which will eventually cause prices to decline by 35% to 50% because of oversupply. The changes in the cannabis tax regulations will not go unnoticed as cannabis taxes are very high and an excellent source of revenue for the state.
Cannabis Tax Revenue by State
In 2014, tax revenue from cannabis sales reached $82.6 million. From that point on, it had a continuous rise, reaching $302 million in 2015, $589.7 million in 2016, and $834 million in 2017. It finally surpassed a $1 billion mark in 2018, reaching $1.3 billion. The tax revenue skyrocketed in 2019, reaching $1.6 billion. Such an upward trend shows no signs of stopping, and—with Illinois joining in—we can expect high figures for 2020.
The cannabis tax revenue that still attracts the most attention comes from Colorado—recently reaching $1 billion in total. Its average monthly count never falls below $20 million, making Colorado an industry’s giant.
That said, Colorado’s success has much to do with the fact it had a head start in comparison to other states. The legalization of cannabis back in 2012 provided the opportunity to create a valuable and strong market. But what about other states? Cannabis tax revenue by state looks like this:
Washington: $362 million
California: $345.2 million
New York: $156.4 million
Oregon: $82.2 million
Nevada: $69.8 million
Proposition for the Lower Taxes
The industry is rising fast, and lawmakers seem to want to speed things up by proposing lower cannabis taxes to boost the legal market.
The idea is to temporarily lower tax on cannabis sales in California from 15% to 11% for the next three years and completely eliminate the cultivation tax during that period. With this act, they are hoping to boost legal cannabis sales and make an even bigger impact on the industry. Though cannabis is legalized in some states, high taxes also entice purchase on the black market.
Illinois is also considering lowering the taxes as an act of encouragement. Recreational cannabis sales are said to have a 3% weed tax starting July 1. However, different products do have distinctive taxes, which usually depends on their THC level.
The tax revenue growth also means more benefits for the citizens.
In order to improve the living standard in the US, tax money is typically spent on health care, drug abuse prevention, education, law enforcement, infrastructure, and similar. According to some estimates, many financial advantages can be felt on both the local and state level.
Each state decides on its own what the priorities are in the current year.
The Bottom Line
When it comes to the cannabis industry (and CBD industry in particular), it’s hard to make precise estimations. Legalization efforts should pay off this year as well, but it remains to be seen what exactly is going to happen. Cannabis taxes are a great source of funds, but there is another way of enlarging those funds except for legalization. Lower cannabis taxes could perhaps bring in more revenue.
Bojana Petkovic is always on the lookout for new adventures and creative drives, and Bojana is currently mesmerized by the fast-paced cannabis industry and providing the internet community with valuable information via LoudCloudHealth.