Congressional Research Service: Report On Federal Government Taxing Marijuana

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 thoughts

  1. 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.

  2. 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.

  3. …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.

  4. 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.

  5. 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.

  6. 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.

  7. 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?

  8. They can only tax interstate commerce. If people accept this, it opens the door to the fed laying excise taxes on anything they want to what so ever because they can use the prohibition logic of subjective market influences to justify it.

    The prices they quoted are actually current prices. The average price for dirt weed is literally almost the same as what they quoted as the market average- dirt weed is the current market average.

    They are giving people’s hopes up to get them to believe they are going to get award winning stuff for nearly free. LOL

  9. jeff says:
    November 20, 2014 at 8:39 pm

    Very nice on the economics of a cancer cure.

    You might like this:

    Cannabis cures cancer. Cancer kills 586,000 Americans every year. Every Prohibitionist is complicit in mass murder.

  10. In the 80’s an oz. was $120.At $18 per oz. a $50 tax would increase the price to $68. That’s still below 1987 black market price.

    It’s nice to see some sensible movement in a town that wouldn’t even debate this in committee a few years ago.

  11. All Pres. Obama has to do is “find his pen and sign and executive order rescheduling MJ form I to II; then children could get well.”

    I would have thought Prez O’ would have done this the first day he took the Oath of Pres.

    Does not Obama care about his family’s health?
    surely he does not want daughters use tobacco?

  12. Pres Obama will be the last one to hop on board the Medical Marijuana wagon;

    who knows if he does not use the herb himself?
    (I know he quit tobacco about 3 years ago.)

    MJ does not cause disease;MJ “cures diseases”!

  13. Taxing freedom of choice makes it not so free.

    When people that had put you in jail for a plant, now only take your money (under threats of force against peaceful people) isn’t life grand?

  14. See; I paid my price for possession Marijuana.

    I served 18 months in a Mexican Jail; 2 months in an American jail and then 4 years of US Federal Probation; I PAID MY DUES Dudes!

    Anne Rockwell Bridgeport Conn. MJ user 1969+AR

  15. Cannabis need not be a scheduled substance any more than rosemary or thyme.

    The simple solution is ending the utterly failed and totally wrongful prohibition of a beneficial herb.

    Future Sociologists/Anthropologists will spend a great deal of time attempting to comprehend our current confusion/ misapprehension surrounding cannabis…and they will ultimately conclude cannabis was never actually the “problem”.

    They will decide Cannabis Prohibition/Criminalization resulted from a combination of Racism and Greed.

    The actual “problem” was human ignorance and greed.

  16. So I just read on that the incoming Senate GOP politician who will be in charge of the DC committee SAYS he is open to implementing DC’s adult recreational law, although he wants more information on the “complex” issue from the way its playing out in Colorado and Washington state.

    Sounds like the usual prohibitionist stalling tactic that they need more information and conclude that there isn’t enough research.

    Well, you know what? There is more than enough research! He needs to be asking the question about how much money a federal excise tax on legal weed in DC could bring in to improve infrastructure and the quality of life for the residents of DC, not to mention how much money the feds are projected to rake in from a federal excise tax on cannabis in Colorado, Washington, Alaska, and Oregon, too.

    AND, I don’t want the Congress even to THINK about how much of these revenues they can spend on wars (No More Unnecessary Wars!) and how much of the revenue stream they can use to give tax breaks to businesses that ARE NOT ACTUALLY GOING TO USE IT TO CREATE JOBS.

  17. 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. – Don

    How many people consume an ounce of marijuana in one evening compared to how many people routinely consume a gallon of beer in one evening?

    It’s impossible to consume an ounce of cannabis in one evening…it’s far too common for many alcohol abusers/addicts to consume more than a gallon of beer in one evening and subsequently commit reckless bloody carnage on our roadways.

    Cannabis does not cause intoxication due to the proven fact it is not a toxic/ lethal poison like ethanol alcohol.

  18. Raw cannabis (bud as we know it now) could be as low as 5-18 $ per ounce but I think the future market is in products (such as drinks, food and extracts) that contain cannabis – these can sell for much higher prices than just bud alone.

    Changing world !

  19. Cannabis needs to be regulated exactly as rosemary and thyme.

    Any other result is profit driven Capitalism at it’s worst!

  20. ps I like “piff”; I pay a pretty penny for THC Piff is from the word “Epiphany which can be caused by smoking Ethogens such as THC.

    An Ethogen is a herb provoking God-thoughts.
    I believe in Jesus and his “natural healings”.

  21. Government bean counters carry eternal optimism. Americans would just like due process to make a comeback. Policing for profit has made cannabis prices skyrocket and heroin prices plummet.

  22. It is a tough pill to swallow, or bowl to smoke if you will, to have the feds looking to fill a general fund with an excise tax that is simply unfair. They want $10 an ounce? Sure, but placing such a large tax on top of what states will already charge [and state moneys will mostly likely be much more soundly spent] may have unintended consequences. They will need to have a provision for homegrowing if they wish to make this a reality, otherwise the black market will continue to flourish with cheaper priced goods.

  23. Bringing in the amount of marijuana tax issue to Congressional debate while we’re still under prohibition is like asking how much you want to pay for going to jail while children are still dying from severe epilepsy.
    DESCHEDULE. We can figure out the tax issue later.

  24. Speaking of Richard Nixon,

    “Look, we understood we couldn’t make it illegal to be young or poor or black in the United States, but we could criminalize their common pleasure. We understood that drugs were not the health problem we were making them out to be, but it was such a perfect issue…that we couldn’t resist it.” – John Ehrlichman, White House counsel to President Nixon on the rationale of the War on Drugs.

    Cannabis cures cancer. Cancer kills 586,000 Americans every year. Every Prohibitionist is complicit in mass murder.

    Pass it on.

  25. Illinois denies medical treatment based on a criminal conviction…thereby excluding “cannabis criminals” from receiving medical therapy in the form legal for those who didn’t get caught!

    Cannabis criminals also suffer from illness and disability…should The State of Illinois also deny “cannabis criminals dental care?…Physician prescribed pain medications?…legal access to deadly alcohol?

    Perhaps cannabis criminals should be denied all medical care?

    The denial of medical care based on one’s “criminal record” is a dangerous and slippery slope!

    This time it’s “cannabis criminals”!…who’s next…?

    Cruel and unusual come to mind…and to Court.

  26. The US government-private industry collusion cartel has always been in the drug business, cashing in both from illegal and legal drugs. So what’s new here?

    What seems still new to most unwitting people is that the biggest drug dealer is this corrupt cartel, and that legal drugs kill multiple times more people than FDA-approved legal drugs (google/bing “Tougher Supplement Regulation: A Necessity Or Politics?”).

    The US leadership is utterly criminal and psychopathic. Worse, most people still seems to believe in them …

  27. Does pres. Obama have trouble sleeping worrying about the Epileptic children who cannot get Medical Marijuana extracts?

    I know I sure do! AR “studying herbs since ’70

  28. Does pres. Obama have trouble sleeping – Anne of the Green

    Is it possible he uses cannabis as a sleep aid and stress reducer?…?…Choom Dreams?

    I voted twice for The Hypocrite in Chief!

  29. You all might not realize it but the Mexicans have beheaded 100s more people than ISIS…..
    America’s War On Drugs……

  30. This would be a great first step on the road to national legalization.

    Too many people suffering needlessly. Get involved!! Let your voice be heard!!!!!!!!!

  31. Cannabis is “legal”.

    The laws prohibiting cannabis consumption are not.

    The very concept of a plant being “illegal” is both absurd and obnoxious.

  32. Mex, you missed the part about the $50 per ounce excise tax. So more like $65-75 per ounce. I would think the edibles market would consume the most of the annual demand!

  33. Eric Garner was killed for a tax law violation. – MSimon

    Yeah, the sad fact is that Mr. Garner was not selling cigarettes the day he was murdered.

    Reports indicate he had just broken up a street fight(doing the Cops job?)

    I do take your point and agree…but would add Mr. Garner’s life was taken by a Gang of Thugs operating illegally under the color of law…and skin color was totally relevant.

    Killed for suspicion of selling legal dope while Black!…Only in America!

    Can’t kill youngsters for walking on their own streets…can’t kill a man for suspicion of selling loose cigarettes (legal Dope)…just can’t!…and still pretend we are a Country/culture who holds Justice in high regard.

    Was The American Dream just that?

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