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MMJ: A Money-Maker for States? Not Really.

MMJ: A Money-Maker for States? Not Really.

By Canna Law Blog on September 14, 2014

Opponents of marijuana legalization often view state legislators’ enthusiasm for such measures as simply a way to shore up (often depleted) state coffers. In reality, however, it seems that states are usually just looking to break even — at least in the case of legalizing cannabis for medical use. Taxes collected on recreational marijuana are much higher than for medical.

On the medical side, legislators realize that implementing a bureaucratically-heavy licensing regime comes with substantial cost. Applications must be reviewed, patient databases created, and regular monitoring and auditing performed. And, as Clark County, Nevada recently made clear, it hopes that the application and licensing fees and the taxes it collects will cover those costs. That county (which includes Las Vegas) does not expect a windfall from its burgeoning MMJ market. Similarly, Illinois has set up a medical cannabis fund, designed to recoup the direct and indirect costs associated with implementing, administering, and enforcing its Compassionate Use of Medical Cannabis Pilot Program Act. Application and licensing fees and the 7% privilege tax levied at the time of sale from grower to dispenser will go into the fund, with any excess used to support crime prevention programs. Implicit in these tax schemes is the idea that the state should not be getting rich off patients with chronic illness.

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