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Cannabis

Break Down Of Recreational Marijuana Taxes By Michigan Based Cannabis Legal Group

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MARIJUANA-TAX-BREAKDOWN

Lit Provisioning Centers in Evart opened up on Friday with a big hit. 9 & 10 news states, in just two days, they served more than 750 customers and made $75,000 in recreational sales with average customers spending $103. The centers actually ran out on available flowers, expecting more this week. 

These numbers now hold a flame to the downstate’s first day of recreational sales which ranked from 2,200 people across four businesses with more than $220,000. As for the medical marijuana taxes in Michigan, it is taxed at a 6% sales tax, but recreational marijuana is a little more complicated than that. 

For recreational marijuana, the state of Michigan currently charges a 6% sales tax along with a 10% excise tax. Barton Morris with Cannabis Legal Group delved into the matter deeper and showed how those taxes break down. 

Morris said that although that money goes to the general fund, it is bookmarked for particular projects such as roads, schools, and some of the money even goes back to the communities in which these facilities are being created. 

Here’s a brief break down of how Michigan compares to other states in terms of taxes on cannabis legalization:

Washington has a 37% tax, California charges a 15% sales tax, and Colorado charges a 15% sales and 15% excise tax. 

California is even debating about increasing the sales tax on legal cannabis sales. But this idea is not being welcomed by the industry leaders, retailers or consumers. After the Farm Bill Act in December 2018 that legalized hemp production with a maximum of 0.3% THC per dry weight, companies have been rushing towards the cannabis industry. 

As the legal cannabis industry grew due to the legalization act, it also paved the way for illicit companies to enter the market and sell illegal CBD products. The U.S. Food and Drug Administration hasn’t set any regulatory guidelines that outline how CBD products can be used in edible items. 

However, the agency has clearly warned companies to not market their CBD products with medicinal claims and benefits that can influence people. It has recently issued warning letters to 15 companies for selling illegal CBD products that contain different ingredients than mentioned on their label, are marketed as a medication or are unauthorized and unlicensed products. 

The agency warns consumers about the rapidly growing illicit cannabis market with unverified products containing high levels of THC, the psychoactive component of marijuana. The maximum federal limit for THC is 0.3% per dry weight, but there are plenty of companies in the US market right now that allegedly sell higher concentrations of THC per bottle or unit of CBD oil. 

Even a slightly higher limit than the permitted federal levels is enough to give a positive result in a drug test. Consumers are advised to buy from licensed and authorized dealers only to ensure that they are consuming safe products. 

There is currently an array of CBD products ranging from ointment, topicals, creams, tincture, to gummies, chocolates, drinks, and pet products. Consumers are touting cannabidiol or CBD for its medical benefits. It is known to have anti-inflammatory and non-psychoactive properties that help in reducing chronic pain, inflammation, muscle injury, anxiety, depression, insomnia, back pain, etc. 

CBD is also known for alleviating the symptoms of life-threatening diseases such as cancer, Alzheimer’s, epilepsy and Tourette. Research suggests that CBD is a potent drug that can help in treating a wide variety of ailments. However, there is a long way to go to prove all the medical claims made by CBD. 

Morris says the perception is that cannabis could be a significant tax benefit, but they wanted to ensure while writing the ballot proposal language that it will be something with a tangible benefit. He further added that they also wanted to ensure that the voters approved the benefit as well so they identified schools and roads to be important factors.

As for cigarettes, they are taxed at 10 cents a cigarette or $2 on a 20 pack. Beer, wine, and Liquor all carry a 6% sales tax with a varying excise tax. Morris says that there’s a strong reason behind how the tax on recreational marijuana is set at its current rate. 

Morris says they didn’t want the taxes to be extremely high so it would push people to buy cheaper products from the black market.

Ivan writes about Cannabis at The Cannabis Radar. He has a degree in Nutrition Sciences from University of Oklahoma Health Sciences Centre. He likes to spend his spare time reading to his daughter or spending time with his wife.

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