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What Should You Expect to Pay in Taxes on Your Cannabis Purchase at a Dispensary?

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If it’s your first or nth time visiting a dispensary, you will pay tax on every cannabis product or delivery item you bought. On each cannabis product you paid for, you pay at least 20% in taxes. This could go as high as 40%, depending on the product and state you live in.

 

The first time I purchased cannabis in a dispensary, I was shocked at the total price rung at the point of sale. Further investigation showed that customers pay a percentage of excise tax, local business tax, and state sales tax. Every canna-legal state generates multiple types of revenues on cannabis transactions. Most dispensaries have POS software that makes it easy for customers to understand their cumulative and post-tax fees on each transaction.

 

Cannabis Taxes in the Legal States

Taxes are often added as a single percent to subtotal in traditional retail. For instance, the final price would be $33+ $2.98 = $35.98 if the item costs $35 and the sales tax is 8.5%. It goes without saying that cannabis has more complicated and expensive taxation. You can anticipate being charged one or more forms of taxes at your favorite dispensary, depending on local rules.

 

There are three common types of cannabis taxes.

Sales Tax

The customary tax we are all accustomed to paying while making purchases is the sales tax. State-by-state and city-by-city variations in the tax rate typically range from 4 to 17%. For instance, the rate in Oregon is 17%, whereas Montana’s medicinal marijuana sales tax is 4%. With a current medical marijuana identification card, medical patients in places like California and Maryland can avoid this charge (MMID).

 

Sales tax is included in the state’s general fund and is frequently utilized for municipal transportation, health programs, public safety, and education.

 

Excise Tax

The excise tax is a type of business tax that is expressly applied to cannabis goods that are sold to consumers. In California, if a retailer buys things in bulk, the item’s price frequently includes the state excise tax of 15%. The excise tax may be applied to the client’s receipt or incorporated in the item’s fee if a store is vertically integrated from its cultivation and/or distribution.

 

Similar to other states, Nevada levies a 15% tax on cannabis purchases and a 10% excise tax on retail sales. Additionally, Colorado imposes a 15% excise tax on the average market rate (AMR) or contract price of cannabis for sale. Each retail marijuana facility is required to file one marijuana excise tax return.

 

The state-collected excise tax, which must be included in all legal cannabis sales and is utilized for projects like cannabis research, substance addiction programs, mental health care, and environmental protection, is a quarterly revenue source for the state.

 

Local Business Tax

Local governments decide on local taxes, municipal taxes, or post-tax fees. They have the option of applying or not applying this tax. The municipal business tax may not apply to medical patients, or they may pay a lower rate than adult-use consumers.

 

Given all these possible factors, overall taxation can differ significantly even within the same state. In California, for instance, Oakland, San Diego, San Francisco, and Los Angeles all have varying tax rates.

 

Cumulative Tax Calculation

Retailers must collect various taxes, and the order in which they are computed matters to avoid charging the incorrect amount.

 

The majority of states, including Massachusetts, Colorado, and Oregon, compare all taxes to the subtotal. Others, like California and Michigan, base each tax on the gross receipt plus any other levies that have already been paid. These layered calculations are referred to as “cumulative taxes.”

 

Each state has an approved percentage for each type of tax. For example, if your state’s excise tax is pegged at 15%, sales tax at 7.8%, and local business tax at 5%. All these are added to your product’s subtotal.

Let’s assume your subtotal is $30.

The cumulative tax will equal $38.34.

That is 30 + (30×7.8%) + (30×5%) + (30×15%)

Note that this is just an example. The actual amount would vary depending on your state’s tax laws.

 

If you own a dispensary, here are some practices to ensure your enterprise complies with cannabis tax laws.

 

Understand your local tax laws

Calculating taxes on cannabis sales can be challenging. Be sure to check your state and local legislation before automating tax computations at your dispensary. Consult your accountant or seek legal counsel to verify compliance and accuracy since you don’t want to find yourself in a situation where you’ve been collecting taxes incorrectly.

 

Keep your records updated

Retailers of cannabis are required by law to maintain financial records proving the accuracy of sales. You can keep track of inventory, record activity for each sale transaction, and keep a record of each customer who comes into your dispensary by using a point-of-sale dispensary system designed exclusively for the cannabis industry.

 

In the event of an audit, you will be able to prove precisely where your profits come from and where your items are from seed to sale if you have a paper trail of compliance created by documenting everything.

 

Keep your operations transparent

By properly writing tax information on your receipts, you may help your customers understand exactly what taxes are being charged. By doing this, pricing complaints will be reduced, and it will be clear how their overall cost was determined.

 

To be able to effectively respond to consumer inquiries and impart knowledge about how cannabis tax revenue is used to enhance local communities, educate your team on each sort of tax.

 

Last words

If you’re a customer, it is also advisable for you to be well versed in your state’s tax legislation. This way, you know if you’re being charged rightly or not.

 

Customers and business owners must be willing to take a stand against excessive cannabis taxation. Many states have little or no tax incentives for cannabis purchases, whereas other industries enjoy these incentives. If excessive cannabis taxation isn’t curbed, many consumers will continue patronizing black market operators. Additionally, if the tax rates continue rising, many small cannabis business owners will be pushed out of business.

 

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2024: Adult Use Marijuana in Florida

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In 2024, we may finally see adult use marijuana in Florida. This week, Smart & Safe Florida, a non-profit political organization, filed its ballot initiative, “Adult Personal Use of Marijuana“, with the  Division of Elections to legalize adult use marijuana in Florida. Make it Legal Florida already unsuccessfully tried to get adult use on the ballot for this year. Notably, this current initiative is backed by Trulieve, the largest cannabis operator in the state. In any event, adult use marijuana in Florida by ballot initiative must first make it past the Florida Supreme Court.

Unlike many states, Florida initiative sponsors can submit petition signatures at any time. After 25% of required signatures have been collected and sponsors submit a ballot title and summary to the Secretary of State, the Secretary of State then submits the proposal to Florida Attorney General. The Florida AG then petitions the State Supreme Court for an advisory opinion on “the measure’s compliance with the single-subject rule, the appropriateness of the title and summary, and whether or not the measure ‘is facially valid under the United States Constitution.’” The single-subject rule means that the initiative can only address one subject, topic, or issue. And the Court’s review of the title and summary hinges on whether the initiative is “printed in clear and unambiguous language” pursuant to Florida law (the “Clarity Requirement”).

The “Make it Legal Florida” fail

The “Adult Use of Marijuana” ballot initiative sponsored by Make it Legal Florida would have allowed people 21 and up to “possess, use, purchase, display, and transport up to 2.5 ounces of marijuana and marijuana accessories for personal use for any reason.” On its review, the Supreme Court struck down the initiative based on the Clarity Requirement, alone; it found that the summary of the initiative was misleading to voters and inaccurate in that it would lead voters to believe that federal cannabis laws would no longer apply, among other issues. We’ve seen a lot of this type of thing around the country, unfortunately. See: Cannabis Ballot Measures Are a Sucker’s Game.

A second bite at the apple

Smart & Safe seems to have learned from Make it Legal Florida in that the main goal appears to just get the initiative language past the Supreme Court (and on to the ballot) by utilizing as little language as possible to form the Constitutional Amendment.

The initiative for adult use marijuana in Florida is only four pages long. Here is the summary:

Allows adults 21 years or older to possess, purchase, or use marijuana products and marijuana accessories for non-medical personal consumption by smoking, ingestion, or otherwise; allows Medical Marijuana Treatment Centers, and other state licensed entities, to acquire, cultivate, process, manufacture, sell, and distribute such products and accessories. Applies to Florida law; does not change, or immunize violations of, federal law. Establishes possession limits for personal use. Allows consistent legislation. Defines terms. Provides effective date.

The initiative makes clear that only Florida civil and criminal penalties would not apply if the law passes, and that the initiative does not change current federal laws. Further, Medical Marijuana Treatment Centers (MMTCs) (the only entities that can make and sell cannabis products) would also be the ones to make and dispense adult use products (unless the state decides to license other entities, too). That’s pretty much it.

What happens next

Smart & Safe first needs to net enough signatures to get the initiative to the Secretary of State. Of course, this initiative is receiving mixed reactions from the industry. It seems that Floridians badly want adult use cannabis in a regulated fashion. The only way to do that, though, may be through an initiative like this that has, overall, very little detail and that preserves the currently monopoly held by MMTCs. This type of program would barely open the door for industry expansion.

In the end, while Smart & Safe may end up passing muster with the Secretary of State and satisfying the Supreme Court on any challenge, voters may or may not get behind the future of adult use marijuana in Florida with such an abbreviated law. That’s especially with the Florida primary elections on the horizon. We will keep you posted.



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These Are The Best Saltines, Ever!

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Why Does Food Taste Better High?

Most cannabis users can relate to the feeling of serious hunger after consuming cannabis or while in the midst of a cannabis high. You know what we mean; that immense craving to eat every snack in the fridge or quickly fix yourself a pickle and peanut butter sandwich in a split second. This common craving among cannabis users is what is termed “the munchies.”

 

A lot of cannabis users will agree that one of the best feelings from smoking weed is the ample satisfaction derived from eating a bag of chips. Unsurprisingly, there are scientific reasoning that support why food tastes a lot better when high.

 

In this article, we will explore both the anecdotal and scientific evidence that surrounds munchies. Keep reading to learn more!

 

Why does cannabis make food taste so much better?

The existence of the munchies has not only been supported by science but also by anecdotal evidence.  For as long as cannabis has been consumed, users have experienced munchies. This is why cannabis is majorly recognized by researchers as an appetite stimulant. However, it is not until recently that science was able to prove the theory behind it.

 

Food tastes better when high for many reasons, some of which include;

 

THC promotes euphoria

One of the central reasons why food tastes better when you are high is because of the body’s distinctive endocannabinoid system (ECS). The ECS stimulates a feeling of joyful, psychoactive “high” when THC is consumed. THC, the psychoactive compound present in weed, interacts with the brain’s CB1 receptors, resulting in munchies.

 

THC naturally affects the brain by stimulating dopamine production (the feel-good compound). Dopamine flooding the brain leads to a feeling of exaggerated pleasure and mind-altering euphoria while simultaneously reducing inhibitions. Meanwhile, existing anecdotal evidence implies that similar feelings also apply to the heightened feeling of eating high. 

 

People who have smoked weed and went to town on a plate of food or box of ice cream can testify to this heightened feeling

 

Weed heightens hunger

In all of history, people have noted that smoking cannabis helps to improve their appetites. As a matter of fact, at the peak of the HIV/AIDs pandemic, a hospital volunteer popularly known as Brownie Mary shared cannabis-infused brownies to HIV/AIDS patients in the hospital.

 

Mary Jane Rathbun who went by the moniker Brownie Mary was a volunteer at San Francisco General Hospital at height of the AIDS crisis in the 1980s. She offered patients cannabis-laced confections to deathly ill men which helped patients eat more as they normally could not.

 

Brownie Mary reportedly baked more than 600 cannabis-infused confections every day by banking on weed donations from local cannabis farmers. She paid for the sugar, flour, chocolate, and butter using her monthly checks. Luckily, the effect of cannabis on hunger not only boosts appetite but also has vital medicinal properties.

 

Two decades after the heroic display of Brownie Mary at a time when cannabis was believed to have no medical value, it turns out it does. Now, cannabis has proven to be a wonder drug for the treatment of epilepsy, Alzheimer’s, anxiety, chronic pain, and so on. However, it was cannabis’s unique ability to boost appetite that initially had people to have to rethink the “War on Cannabis”.

 

THC helps to play a vital role in the production of ghrelin. Ghrelin is a hormone that acts on the appetite center in the brain to facilitate hunger. And according to science the more hungry we feel, the more satisfaction we get from eating.

 

THC enhances food smell and taste

Giovanni Marsicano led a research study at the Université De Bordeaux in 2014 to determine if weed can certainly make food taste and smell better. The results and conclusions made by the neuroscientists who experimented proved positive. They discovered that cannabis interacts with the CB1 receptors in the brain and amplifies the sense of smell.

 

Considering the human sense of smell and taste are closely related, an amplified sense of smell rightly heightened the satisfaction derived from flavourful food. Hence, the cravings many experiences after smoking a joint. 

 

To test the hypothesis, the team of neuroscientists observed mice fed wine banana, and almond oils. The study revealed that mice exposed to THC ate more than those who weren’t. Also, mice exposed to THC spent more time sniffing the oils and didn’t habituate as fast as those who weren’t exposed to THC. This means at a time when odor detection is sensitized and increased, you are likely to eat less. However, you are also more inclined to relish the aromas, texture, and flavors of food

 

 

THC may not prompt you to eat more vegetables

While food cravings are heightened after smoking a joint, you may not be inclined to eat more veggies. So the question remains, why do we tend to seek sugary snacks and junk when high? Well, a recent study published in the Journal Neuropharmacology answers the question. The study also supports the scientific reasonings behind munchies. The study proves that THC amplifies the pleasure we get from eating sugary, delicious, and high-calorie foods but has little or no effect on the food we already hate. This conclusion was made by a team of scientists at the University of Cagliari, Italy.

 

In simple terms, smoking weed is unlikely to magnify your love for food or vegetables you don’t already like.

 

Certainly, smoking a joint might prompt you to tap into your inner chef, making a concoction of every ingredient in your kitchen. However, stoners sometimes just hit their snack stack after getting high. A research study evaluated data in hundreds of counties across the United States and discovered that the legalization of recreational cannabis can be linked with increased sales of junk foods such as cookies, chips, and ice cream.

 

Conclusion

Everyone who has ever smoked a joint and experienced the munchies can testify to the cravings. Eating at such a time can become another high of its own. With science backing this feeling, now you understand why you experience munchies. You can now fully enjoy that bag of chips, ice cream as well as PB&P with the scientific understanding of why food tastes better when high.

 

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3 Million Americans Grow Their Own Weed at Home

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In recent years, the legal cannabis business has experienced an explosion in both private and public growing. But a number of challenges remain in the way of realizing its full potential, including fending off an organized black market, obtaining financial assistance from governmental agencies, navigating a worldwide pandemic, and now waddling through rising economic inflation.

 

The industry is focused more on the retail and production sectors, whereas there are several untapped areas with little noise and enormous potential.

 

Gone are the days when Americans associated cannabis with the “Reefer Madness” stigma. Now, the conversations revolve around legalizing cannabis use, sales, and possession. The majority of the adult population is much more comfortable with cannabis use than ever. They are even willing to share details about their consumption habits and source of products. Anecdotal studies show that homegrowing cannabis is a niche with sparse details. This niche could be a crucial piece of the cannabis market puzzle in a few years if explored.

 

Today, about 3 million residents self-cultivate cannabis at home—over $20 billion is predicted to be spent on homegrow tools and supplies before the decade’s end. This growing trend draws much attention from retailers, cultivators, and operators in the system. Everyone wants to know how they can tap into this budding niche. Either by drawing the homegrowing Americans back into the dispensary fold or capitalizing on their self-cultivating efforts.

 

Growing cannabis at home

As mentioned earlier, 3 million Americans grow their marijuana at home. Many home growers consume cannabis for medical and therapeutic reasons. However, some categorically state that they use cannabis to improve their overall wellness. As to why cannabis homegrows are on the rise, 73.5% say they engage in this new activity for pleasure, while some do it to save cost. 33% of self-growers say they do it because they believe they can produce better cannabis products than those sold at dispensaries. While some do it because it is more convenient and less risky.

 

In most jurisdictions where cannabis is legal, adults are permitted to grow a certain number of plants indoors; here is where the story largely starts and stops. Home growers haven’t been a segment of the market that has been largely regarded as useful over the course of the past few decades of state-level legalization; thus, the broader legal business doesn’t heavily promote them or devote a lot of resources to educating them.

 

Current Stats Show Homegrowing Is Here To Stay

6% of America’s cannabis consumer market grow their marijuana at home. This is a significant number of this population, and it’s projected to rise higher before 2030.

 

Based on data published by New Frontier, consumers who prefer to view their cannabis at home spent over $2.5 billion on growing supplies in 2020. John Kagia, New Frontier Data Chief Knowledge officer explained that home growers spend a few dollars on setting up efficient grow systems. They purchase inputs like seeds, seedlings, and fertilizers for each cycle and tools like pots, polythene bags, and pruning shears.

 

Kagia added that the firm’s projections for the next eight years is that the homegrown community will invest almost $30 billion on supplies alone. He stressed that the homegrown market is a lot larger than most people imagine.

 

According to New Frontier Data, the cannabis homegrow market is diverse. It wasn’t so easy to pinpoint a certain demographic that preferred to grow at home. The data showed that home cultivators are not limited to a certain age, or socioeconomic spectrum. Homegrowers can be married, single, rich, poor, average, regular users, inconsistent users, young adults, or senior adults, they are spread proportionally across all legal states.

50%  of home growers are married, with the majority having children. While 25% make at least $100k annually. 25% make $25 – $49k, and 46% earn below $50k.

 

The co-founder and CEO OF LEAF, Jonathan Yoni Ofir, concurred that the home grow market is big and that gathering this data was tricky. He explained that consumers weren’t so eager to share their home grow experiences, despite being given the choice of sharing anonymously.

 

People are only just becoming willing to discuss their habits. Self-cultivation is more complex than the regular college student closet grown cannabis activities. Toni ofir stressed that it is far from it. Only that the college students used to be the only ones bold enough to talk about it.

 

More Details

New Frontier data shows that over 11 million pounds of dried cannabis have been produced by home growers in the last seven months alone. By 2030, the homegrow market could be producing at least 15 million pounds of dried flowers annually. Most homegrowers produce only what they can consume.

 

For context, only a million pounds of cured cannabis has been produced legally in Colorado this year. Meaning there are over 10x as many home growers as you might expect. That’s an excellent illustration of the volume of work being produced by these hobbyists, said Kagia. With so much flower, there is an actual demand for education about consumer-driven genetics, fertilizers, ventilation, temperature management, pruning equipment, curing technologies, and storage solutions.

 

Why is education important?

One thing holding the homegrow market back is the lack of education and experience. Most homegrowers in this sector have less than four years experience growing cannabis plants in their homes. Less than 15% report that they have upto three years experience in this field. Everyone seems to be learning as they practice. Although the homegrow market is here to stay, participants need to have the proper education to produce better yields with the resources they have. The sooner this happens, the faster the acceleration of the community’s expansion.

 

Bottom Line

The cannabis sector has massive deficiencies in markets like growing supplies when it comes to being able to offer marketable goods and services to hobby farmers who can spend anywhere from a few dollars to more than $1,000 per crop.

 

In reality, slightly less than 58% of home growers claim to spend under $200 on each crop. And more than half of home growers report buying their supplies at neighborhood hardware or garden stores, and more than half say they get their seeds from flowers they’ve bought. Investors should look into investing in growing supplies.

 

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