Bullock’s medical marijuana tax opposed by advocates, Republicans; growers undecided
November 30, 2016 | Geoffrey Marshall
By Hunter Pauli for the Montana Standard
“We understand that it may be tempting to look at the medical cannabis program as a means to help balance the budget or pay for a few new programs, but we think it’s a bad public policy,” - Mike Liszewski
Cut-off medical marijuana patients are caught up in state house budgetary jockeying as members of the Republican-controlled Legislature oppose a proposed budget from Gov. Steve Bullock that includes a 6 percent tax on medical marijuana sales.
Senate President Scott Sales, R-Bozeman, called Bullock’s proposed budget “grossly irresponsible,” and Speaker of the House Austin Knudsen, R-Culbertson, said it is “very unrealistic.” Regarding the medical marijuana tax, Knudsen said they’d need more time to review the specifics, but that they generally oppose new taxes.
State Rep. Daniel Zolnikov, R-Billings, denounced the medical marijuana tax on Facebook as “a punitive sales tax on suffering Montanans to fund increased government spending.”
Local marijuana industry representatives have yet to take a stand for or against the tax, which could legitimize marijuana by tying its tax revenue into the budget. But patient advocates have spoken out against what they call the subsidy of the state by the sick, disabled and dying, 93 percent of whom have been cut off from their providers since August 30.
The owner of Flower medical marijuana dispensary in Missoula, Bobby Long, said it is completely irresponsible for the governor to propose taxing medical marijuana when most patients don’t even have access. One of the three patients he’s allowed to serve under the current law died from complications of multiple sclerosis on Monday. Long said he’s sitting on a stack of patient paperwork to turn in once Initiative 182 is implemented by the courts, Legislature or passage of time, removing the patient limit.
“I’ve got people asking me if they should go to Spokane and Colorado, and that makes me scared,” Long said.
Americans for Safe Access, a medical marijuana patient's rights lobby, has opposed taxing medical marijuana. Its government affairs director Mike Liszewski said it’s inappropriate to tax any medicine, but especially medical marijuana, as it’s not covered by insurance, forcing patients pay all costs out of pocket. Liszewski called a 6 percent tax devastating to patients already living paycheck to paycheck who would have to cut back on their medication to afford it.
“We understand that it may be tempting to look at the medical cannabis program as a means to help balance the budget or pay for a few new programs, but we think it’s a bad public policy,” Liszewski said.
Although most patients nationwide have to pay taxes on their medical marijuana, it comes in the form of state or local sales taxes that also affects other transactions, not a specific tax on medical marijuana as Governor Bullock has proposed. Far fewer states have specific taxes on medical marijuana, and Montana’s would be the second highest in the nation after New York.
Montana is one of four states without a sales tax, making Bullock’s marijuana tax similar to the excise tax Montanans pay on cigarettes, alcohol and gambling. Excise taxes typically target luxury vices like recreational drugs and gambling, not medicine like medical marijuana.
Bullock’s proposal isn’t technically the same as an excise tax, as it is a percentage of final retail price, not a fixed dollar amount per unit, such as the state’s 14 cents per gallon beer tax.
According to a May report by the Tax Foundation, an independent tax research think tank, taxing marijuana at the counter based on final retail price like Bullock proposed is the most practical option.
“Because marijuana can be purchased as a cigarette, an edible, a liquid, or a vapor, all with a wide variety of concentrations, a specific excise tax is untenable,” the report read.
The Tax Foundation also found that high taxation of marijuana does little to reduce the incentive to buy on the street instead of legally. “Colorado, Washington, and Oregon have all taken steps to reduce their marijuana tax rates, with Alaska considering it, after initial rates of 30 percent or more did not reduce the black market sufficiently,” the report read.
Bullock’s 6 percent tax is significantly lower, but with 93 percent of patients cut off from their providers by law since August 30, there’s already an impetus to buy illegally that a pricier medical market wouldn’t help. The governor's director of communication Tim Crowe said the governor has no fear that taxing medical marijuana will make the black market more affordable for low-income patients.
Taxes on recreational marijuana have led to $2 billion in tax revenue for Washington and Colorado, and the Tax Foundation predicts between $17 million and $28 million should Montana legalize and tax recreational marijuana, based off demand in Colorado and Washington. The governor’s office predicts $2.6 million for the general fund from a 6 percent medical marijuana tax.
Zolnikov said big numbers like these are why some folks agree with Bullock’s tax -- until they realize the governor’s tax affects only medicine for a small number of patients, and that those billions in revenue come instead from recreational drugs.
“A lot of people just don’t realize the tax is for medical,” Zolnikov said.
Long said Governor Bullock is one of them.