Congressional Research Service: Report On Federal Government Taxing Marijuana

  • by Allen St. Pierre, Former NORML Executive Director November 20, 2014

    The Congressional Research Service (CRS) released a comprehensive thirty five-page report last week examining the federal government establishing a wholesale excise tax on the production and sale of cannabis-related products.

    In what is one of the most comprehensive policy and fiscal reviews to date of how cannabis can be taxed and regulated numerous areas of consideration were reviewed including enforcement, discouraging youth use, choosing the base to tax (i.e., weight, potency and price), restrictions, labeling, measurement, special tax rates, home production and medical cannabis. Members of Congress initiate these reports to CRS.

    CRS’ economic analysis indicates that cannabis prices are likely to fall from today’s prohibition-influenced prices of $200-$300 an ounce to as low $5-$18 ounce. Economic modeling based on a $40 billion annual cannabis market in the United States tests a $50 per ounce federal excise tax price point (generating nearly $7 billion in federal excise taxes).

    When making the logical comparison of alcohol and cannabis’ ‘external costs’ (i.e., taxation to equate with external costs of the drug use to society), researchers peg alcohol’s external costs to the nation at $30 billion annually; cannabis, at $0.5 – $1.6 billion.

    NORML Executive Director Allen St. Pierre commenting on the new CRS paper: “This CRS report on the prospects of the federal government taxing and regulating cannabis is another clear indication of the political saliency and fiscal appeal of ending cannabis prohibition at the state, and increasingly at the federal level (replacing the nearly eighty-year old failed federal policy with tax-n-regulate policies that are similar to alcohol and tobacco products).

    With fours states and the District of Columbia since 2012 opting for legalizing cannabis, dozens of members of Congress from both major political parties—from states with legalization and those that pine for it—are getting serious about making sure the federal government does not lose out on hundreds of millions annually in tax revenue from the ever-growing cannabis industry in the United States.”




    58 responses to “Congressional Research Service: Report On Federal Government Taxing Marijuana”

    1. TheOracle says:

      Thank you, Allen! Thank you, NORML!

    2. mexweed says:

      I didn’t get it. $40-Billion annual cannabis market divided by $18/ounce price suggests 2.2-Billion ounces consumed per year, or roughly 7 ounces per man woman and child in USA. Using a child-safe Dosage Regulation Utensil that’s 6300 single tokes a year, or 17 a day, for everybody.

    3. M. Simon says:

      There should be a grow your own provision just as there is a brew your own provision for alcohol. That will put a limit on taxes.

      I’d like to see the tax rate go down to where it was in 1935.

    4. jeff says:

      …today’s prohibition-influenced prices of $200-$300 an ounce to as low $5-$18 ounce

      to put this into perspective $300 per oz times 16 to make a pound for $4800.

      or $18 per oz times 16 to make a pound for $288.

      the main point is when someone has lets say cancer and need a pound not many people have $4800 laying around in cash to try and cure cancer. just about anyone could afford $288 pound. medical cannabis is a joke until this changes. But sounds like it could happen sooner then later at this point! Plus they can leagally collect tax at the rate of 7 billion a year.

      Finally we have something we can be proud of congress about as long as they follow through.

    5. M. Simon says:

      And because of the anti-cancer and other anti-disease effects – the externalities are such that they ought to pay us to use it.

      I’d settle for no taxes.

    6. Galileo Galilei says:

      I am astounded to have lived to see something like this come out of Congress.

      Let’s see if it’s just ignored as usual.

      external annual costs of the drug use to society
      ———————————————— alcohol’s = $30 billion
      cannabis = $0.5 – $1.6 billion

      I wonder what nicotine’s annual cost is.

    7. dude says:

      Cool, dude.

    8. Don says:

      While this study is an encouraging sign of government realism, a $50 per ounce federal excise tax on marijuana is absurdly high. That’s about 20x the excise tax on an ounce of tobacco, and the federal excise tax on a gallon of beer is only 60 cents.

    9. Mark I says:

      Taxes without representation stole the most profitable colonial cash cow Britian lost to date. Granting patients the rights stolen by govt fiat should be paramount and first. Taking from the top and bottom is a monopoly and an egregious exercise of intimidation and manipulative controls. This kind of disrespect for the intellect and civil rights of the governed has led to many overhauls throughout history. We don’t need selfies of consiencious objection, do we?

    10. Just An Observer says:

      No more sin taxes! Overtaxed weed will get slaughtered by the black market.