Who would pay taxes on legal marijuana in Ohio?
You would – depending on your participation in the legal industry to be created if voters pass Issue 3.
The proposed Marijuana Legalization Amendment to the Ohio Constitution sets up a tax structure for the business, and it specifies where that revenue would go.
The 10 investor marijuana farms around the state and the as-yet-unknown number of processing and testing facilities will pay a 15 percent tax.
The retail stores – as many as 1,150 that can open under the amendment – will pay a 5 percent tax. The tax, however, will be levied on “gross revenue,” meaning the tax is paid before the business deducts expenses or distributes profits.
The businesses must also pay the commercial activities tax “and all other local taxes, assessments, fees and charges as apply to businesses in general,” says the amendment.
So should you decide to wander into your neighborhood marijuana store to purchase some wares, you’ll pay the regular sales tax AND the 5 percent special retail tax.
Who gets the tax revenue? Eighty-five percent will go to the counties, towns, cities and townships, according to population. Hamilton County (802,000 people) would get a bigger slice than Clermont County (200,000 people). The money would go into the state treasury and be distributed monthly.
“Such funds,” the amendment says, “shall be used for public safety and health, including law enforcement, economic development, road and bridge repair and other infrastructure improvements.”
The remaining 15 percent of the tax revenue would go to the regulatory Marijuana Control Commission, not only to cover its own costs but to fund a business incubator, to set up the non-for-profit medical-marijuana dispensary system, establish mental health and addiction prevention services and to help low-income people buy medical marijuana.
How much tax revenue are we talking about? ResponsibleOhio, the private investor group that wrote the amendment, has estimated $553.8 million in tax revenue by 2020. As an estimate, it could be enthusiastic. But even if Ohio pulls in half that amount, it’ll be a lot more than the state is making at the moment in taxes from marijuana, which is zero.
In the other states that have legalized:
Alaska estimates that it will make between $5.1 million and $19.2 million in tax revenue from commercial marijuana in 2016.
Colorado announced last week that it pulled in $70 million in tax revenue on marijuana sales for the fiscal year that ended June 30. This is nearly twice the amount from taxes on sales of alcohol.
Washington state also made more than $70 million in tax revenue in its first year of legal sales.
Oregon expects to make $18.4 million in tax revenue for the two-year period that began in July.
September 21, 2015