Maine legislators ponder taxes on legal marijuana

July 13, 2017

James Myall, a policy analyst for the Maine Center for Economic Policy, said the bigger the gap between the legal price of marijuana, after taxes, and the street price of black market marijuana, the more people will turn to illicit suppliers.

by Steve Collins, Sun Journal, July 13, 2017

AUGUSTA — Lawmakers hope to have a bill detailing proposals for the legalization of marijuana by month’s end, said Rep. Teresa Pierce, co-chairwoman of a special committee created to wade through the many issues involved in implementing last fall’s ballot question.

AP FILE PHOTO

Different strains of marijuana are displayed during the grand opening of the Seattle location of the Northwest Cannabis Market, for sales of medical marijuana products. 

The Falmouth Democrat said the Committee On Marijuana Legalization Implementation is “getting down to some nitty-gritty work” as it wades through issues ranging from taxes or public safety.

The panel discussed possible approaches to taxing marijuana sales during a meeting Wednesday at the State House, where there appeared to be a consensus to focus on a simple process that would hold down the price consumers would have to pay.

The ballot measure approved by voters called for 10 percent retail tax on marijuana sales, but that’s unlikely to emerge as the Legislature’s preference.

Pierce said she’s eyeing a 20 to 25 percent overall tax as a starting point for discussion. It may wind up lower, some other lawmakers said.

James Myall, a policy analyst for the Maine Center for Economic Policy, said the bigger the gap between the legal price of marijuana, after taxes, and the street price of black market marijuana, the more people will turn to illicit suppliers.

Sen. Roger Katz, R-Augusta, co-chairman of the committee, said a lot of legislators want to find the sweet spot for pricing that will maximize the revenue for the state but not charge even a penny more than necessary, in a bid to drive out the illegal market that has supplied Mainers for years.

Myall said finding that sweet spot is “incredibly difficult,” for government as well as private businesses.

Legislators discussed a range of possible taxes, including excise taxes that would be imposed after cultivation but before retailers get the marijuana in any form. It could be based on weight, potency or some other measure, they said, and would likely make up the bulk of the taxes imposed on the drug.

Rep. Bruce Bickford, R-Auburn, said he wants to see an excise tax based on weight or potency to ensure a more stable revenue stream for the state than simply a sales tax.

Lawmakers said they may opt to drop the sales tax on marijuana to 5.5 percent to match the level paid by consumers for most everything in Maine, though edibles might end up taxed at 8 percent to match the level levied on medical marijuana edibles.

Whatever they do, “ultimately the consumer is going to pay the price,” Rep. Lance Harvell, R-Farmington, said.

Rep. Lydia Blume, D-York, said there ought to be something built in to provide incentives for localities to allow retail shops for marijuana.

“Making it simple is the best way to do it,” she said.

Rep. Kent Ackley, an independent from Monmouth, said incentives would encourage towns to participate, a move that would help consumers and compensate communities for any additional costs associated with the businesses.

Sen. Mark Dion, D-Portland, said he leans toward the lowest possible tax rate, perhaps 10 to 15 percent. He said the state could always raise it later if that makes sense.

In the meantime, though, supporters of a low rate said it will help destroy the black market and encourage most users to rely on regulated, legal shops.

“Keep it as simple as possible,” Dion said. “We’ve got to get this going.”