Stick around the cannabis industry long enough and you\u2019ll
\nhear someone say \u201cstates are the laboratories of democracy.\u201d It\u2019s an idea that
\nwas first published by U.S. Supreme Court Justice Louis Brandeis in 1932, when
\nBrandeis wrote that states have the ability to \u201ctry novel social and economic
\nexperiments without risk to the rest of the country,\u201d and it\u2019s a political idea
\nthat the cannabis industry has certainly embodied. <\/p>\n
Since California broke with the federal government in 1996 to legalize medical marijuana, every state in the union except Idaho<\/a> has experimented with a different way to regulate cannabis, with varying levels of success. But today, one particularly interesting economic experiment is playing out in Illinois. The state is going to tax cannabis products based upon their THC percentage, not upon their weight, as most states with adult-use cannabis do today.\u00a0\u00a0 <\/p>\n On June 25, Illinois became the first state to legalize<\/a> an adult-use cannabis marketplace through the legislature. The law that Gov. J.B. Pritzker signed<\/a>, which will go into effect on Jan. 1, 2020, puts forth a baseline tax structure for recreational cannabis in the state with three tiers.<\/p>\n Cannabis products with less than 35% THC will face a 10% excise tax. Cannabis products with more than 35% THC will face a 25% excise tax. Meanwhile, cannabis-infused products, such as edibles<\/a>, will be taxed at 20%, regardless of their THC percentage. The vast majority of cannabis flower on the market today falls below that 35% THC line, while cannabis concentrates usually test at above 50% THC.<\/p>\n This means that a cannabis consumer in Illinois looking to purchase some artisan ice-water hash<\/a>, a delicious terp sauce<\/a> or a vape cartridge<\/a> will pay 15% more in excise tax (not including any state or city sales taxes) than someone purchasing flower. <\/p>\n \u201cWe don\u2019t have any examples of other places that have tried Lindsey told Cannabis Now that the THC tax structure was \u201cThey came in to the discussion with an idea that the state should Today, Illinois levies<\/a> an excise tax of 23 cents per gallon on beer (or any alcohol between 0.5 and 7% alcohol), $1.39 per gallon on wine (or any alcohol between 7 and 20% alcohol), and $8.55 per gallon on liquor (or anything with more than 20% alcohol).<\/p>\n That means that a similar tier system for cannabis based on But while Oklahoma-based cannabis attorney Sarah Lee Gossett \u201cLooking at the federal cannabis legalization legislation S. 420 that\u2019s pending<\/a>, it would treat cannabis like alcohol, which I think is a good plan as far as having a structure to regulate and tax it,\u201d Parrish says. \u201cUnfortunately, our testing technology isn\u2019t quite specific enough right now to be basing a law off of the results.\u201d <\/p>\n Labs in states such as Oregon<\/a> and Washington<\/a> have been plagued with problems in their lab testing industries, though it does appear that determining the 35% THC barrier will be a less intensive testing requirement than the full pesticide and heavy metal contaminants tests that states are struggling with today. <\/p>\n Another key detail that separates cannabis from alcohol is the complexity of the plant\u2019s cannabinoids and the way they interact with the human body. By focusing only on the THC percentage (like the ethanol percentage in alcohol) in creating the tax, Illinois regulators could be creating a loophole for concentrate consumers to start purchasing products to get high that aren\u2019t THC, like delta-8 extracts<\/a>.<\/p>\n But Lindsey says the Illinois tax structure is written to be \u201cRight now, no one\u2019s talking about other cannabinoids, While Parrish expressed concern that taxing cannabis based \u201cPatients are not going to pay any additional tax,\u201d Lindsey Lindsey says that if the THC tax model takes off, the Since Illinois passed its adult-use cannabis law, there\u2019s been very little focus on this new tax structure. Most of the attention has been on the promise of the state\u2019s equity program<\/a> and the hundreds of thousands of people who stand to have their cannabis possession records expunged.<\/p>\n \u201cI thought this new tax structure was going to make a big For now, the only other jurisdiction with a similar tax structure is Canada. In Canada, edibles, extracts and topicals face an excise tax<\/a> at a rate of one cent per milligram of THC.<\/p>\n Lindsey says that it\u2019s too early to tell if other jurisdictions will think that the THC tax structure for Illinois is a good idea and follow along. However, he thinks it\u2019s important to note the Illinois program was built with so much flexibility because the lawmakers were not beholden to a voter initiative that legalized cannabis, which is what every other state with adult-use cannabis has faced in the past. (Vermont legalized adult-use cannabis through the legislature in 2018<\/a>, but only made it legal to possess cannabis. It has not yet set up a legal marketplace<\/a> for cannabis.) <\/p>\n \u201cThe way the Illinois bill was structured was to set a TELL The post Taxing Based on THC: What It Means for Concentrates<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
Stick around the cannabis industry long enough and you\u2019ll hear someone say \u201cstates are the laboratories of democracy.\u201d It\u2019s an idea that was first published by U.S. Supreme Court Justice Louis Brandeis in 1932, when Brandeis wrote that states have the ability to \u201ctry novel social and economic experiments withoutContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":32,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,943,240,170,5143,1051,153,420],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/36657"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/32"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=36657"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/36657\/revisions"}],"predecessor-version":[{"id":36658,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/36657\/revisions\/36658"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=36657"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=36657"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=36657"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nthis, but it\u2019s certainly not an unusual idea \u2014 you pay more for top shelf,\u201d
\nsays Chris Lindsey, the senior legislative council for the Marijuana Policy
\nProject. Lindsey worked on drafting the adult-use cannabis legislation that
\npassed in Illinois, in collaboration with lawmakers and special interest
\ngroups. <\/p>\n
\nproposed by one of the groups that \u201cwasn\u2019t explicitly opposed to legalization,
\nbut wanted to make sure that they were near the heart of the conversation,
\nespecially about issues of public health.\u201d<\/p>\n
\ncap the amount of THC in raw cannabis, and of course, that wasn\u2019t workable. We
\nwant to displace the underground market, and that\u2019s setting yourself up for
\nfailure,\u201d Lindsey says. \u201cBut then \u2014 and I don\u2019t remember exactly who had the
\nspecific idea \u2014 the idea was just sort of floated the idea that we could do
\nsomething similar to alcohol and tax it at higher rates for those who want to
\npurchase higher amounts.\u201d<\/p>\nShould Cannabis Be Regulated Like Alcohol?<\/strong><\/h4>\n
\nTHC percentages should be nothing new to consumers. <\/p>\n
\nParrish says that she does think cannabis should be taxed similarly to alcohol,
\nshe cautioned that it might place too much of a burden on a state\u2019s testing
\ntechnology. <\/p>\n
\nflexible, and the state is planning and prepared to alter as the industry
\nmatures.<\/p>\n
\nexcept CBD,\u201d Lindsey says. \u201cThe way it would happen is there\u2019s another popular
\ncannabinoid that comes along, and we hear about it constantly, or we hear about
\nanother cannabinoid that causes intoxication, and that\u2019s where we\u2019d see a quick
\nresponse. They\u2019d fill that gap. Right now, there\u2019s no conversation around
\ndelta-8 in Illinois.\u201d<\/p>\nWhat Does the THC Tax Mean for Medical Marijuana Patients? <\/strong><\/h4>\n
\nupon THC percentages could put an undue burden on medical marijuana patients
\nwho turn to high-potency products for things like relief from
\nchemotherapy-induced nausea, Lindsey says that Illinois\u2019s THC tax applied only
\nto the recreational cannabis market. <\/p>\n
\nsays. \u201cMedical marijuana products fall into the same bucket as pharmaceuticals,
\nwhich is taxed at 2%, so that won\u2019t change. This [THC tax] is only for the
\nadult non-medical market \u2014 though, of course, some of those people are using
\nthe adult-use cannabis market for medical reasons.\u201d<\/p>\n
\nMarijuana Policy Project would lobby other states to make sure they weren\u2019t
\nusing it as an excuse to price gouge patients.<\/p>\nWill the THC Tax Catch On Elsewhere?<\/strong><\/h4>\n
\nsplash, but that was before everyone got excited about expungement and we did
\nthe math about how many people\u2019s records would be impacted,\u201d says Lindsey. \u201cAt
\nthe time, I predicted this was something we\u2019d see in other places. But now,
\nit\u2019s too early to know if that\u2019s really going to happen.\u201d<\/p>\n
\nbaseline for regulations, but there\u2019s tons of running room beyond that, so that
\nthe legislators can get the program up and running without public comment and
\ndeliberation,\u201d says Lindsey. \u201cAt the end of every section of the law, it ends
\nby saying \u2018and you can change the rules.\u2019 Talk about the laboratory of
\ndemocracy!\u201d<\/p>\n
\nUS<\/strong>, do
\nyou think cannabis concentrates should be taxed at a higher rate than cannabis
\nflowers?<\/p>\n
\n
\nRead More: Taxing Based on THC: What It Means for Concentrates<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"