Billings – Proposals to tax Montana’s 12-year-old medical marijuana program could hit patients dealing with serious medical conditions, but the move is hardly without precedent.
A budget proposal released by Gov. Steve Bullock this month includes a 6 percent tax on medical marijuana sales to help boost the revenue picture.
Tim Crowe, a spokesman for Bullock, said this would be a “consumption tax” similar to tobacco or alcohol and could bring $2.6 million in revenue over two years.
In addition, one state legislator is drafting a bill that would take it a step further, adding taxes to fund programs for low-income patients and drug rehabilitation.
Rep. Bradley Hamlett, D-Great Falls, is working on a marijuana taxation bill that he said should focus not only on the state general fund but also on providing aid for those who can’t afford it.
“A lot of people that would use medical marijuana don’t have the means to necessarily pay for it,” he said, “because if they’ve got chronic pain, they might be dealing with illnesses. They might be out of work.”
Hamlett said he is also considering a separate tax that would help fund counseling and rehabilitation for addicts of any drug – something he said is a big problem in Montana.
The proposed rates for Hamlett’s bill are 3 percent for medical marijuana subsidies and 21 percent for drug programs. They would be in addition to the governor’s general 6 percent proposal.
Though still a draft, the total tax of 30 percent rivals Washington’s 37-percent excise tax on recreational marijuana. Recreational marijuana is typically taxed at a higher rate than its medicinal-use counterpart.
“Some may be like, ‘Whoa, that’s a big number.’ But it’s a big problem,” Hamlett said of drug addiction.
He said he will bring forth the bill to spur a debate about what, if any, the tax should be. The rates are subject to review.
The Montana Cannabis Industry Association said in a statement that it was open to discussion, especially as the figures are now preliminary. Fresh off a long legal battle and ballot initiative campaign to save the program, the group is focused on patient access.
Kate Cholewa, who runs government relations for the MTCIA, said that it’s worth considering both sides of the tax issue.
“There’s a long road ahead and it might be premature to react. That said, medications are not taxed in Montana, so objections to singling out cannabis for taxation make sense,” she said. “The average patient spending $200 per month would be looking at a $12 per month increase in cost.”
Should this be picked up in the Montana Legislature after it convenes in January, it will be a patchwork of policy in states where medical marijuana is legal. In the absence of guidance from the federal government, for which all marijuana is illegal, states have tailored their own programs nearly from scratch.
The ambiguity with federal drug policy also opens up medical marijuana for taxation at the state level.
“Unlike pharmaceutical drugs, medical marijuana is a Schedule I controlled substance regulated by federal law,” Crowe said. “The requirements associated with medical marijuana are substantially different than any other product due to the conflict between state and federal law.”
More than half of states have now approved some form of medical marijuana program. Many of those states, even those that have legalized recreational marijuana, tax the medical form.
New York and Nevada tax medical marijuana at 7 percent and 2 percent, respectively. Other states with medical marijuana taxes on the books have exempted it from sales tax. Some simply impose the normal state sales tax like any other retail item.
Medical marijuana isn’t always taxed at the point of sale, however. Pennsylvania, for example, doesn’t charge a sales tax for medical marijuana but taxes 5 percent on gross proceeds when its sold from a grower to a dispensary.
Minnesota, Oregon and Massachusetts are among states that have exempted medical marijuana from sales taxes. Like Montana, Oregon has no state sales tax.
Montana already has consumption taxes for specific items like lodging, gasoline, car rentals, alcohol and tobacco. And without a general sales tax, it would take a special tax to extract more state revenue from medical marijuana sales.
There are local taxes in the state, too. Whitefish has a local resort tax of 3 percent that has exemptions for medicine, whether or not it’s obtained by prescription. City Manager Chuck Stearns said on Monday that medical marijuana falls under that exemption.
Legal and medical marijuana have provided cash infusions for states that have loosened laws on the drug. Washington recorded more than $5.2 million from sales taxes alone on medical use.
While the MTCIA voiced concern about singling out medical marijuana patients, it hasn’t taken an official stance. Cholewa said that putting a tax on the books could further cement the program, meaning medical marijuana is here to stay.
“Being integrated into governmental systems also protects the program from federal interference,” said Cholewa, the organization’s spokeswoman. “When the program is protected, patient access is protected. So, there are different angles to consider.”
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