Alaska has the highest recreational cannabis taxation in the nation, while New Jersey has the lowest.
The paper was created to help politicians, media, and community members understand cannabis tax discussions by documenting each state’s cannabis tax system, offering revenue data, explaining the advantages and downsides of different cannabis product taxes, and analyzing tax model aims.
Authors assumed all states would price an ounce of retail marijuana at $100 with a 20% THC potency and add wholesale taxes to the purchase price to establish comparable taxation regimes.
Alaska has the highest taxes, at $57.50 on a $100 ounce, due to its $50-per-ounce excise tax on floral products. Washington, New York, Connecticut, and Nevada followed.
New Jersey and Michigan have the lowest taxes at $14.32 and $16.
As more states legalize cannabis, each creates its own rules and procedures, creating a unique patchwork of cannabis regulations from state to state.
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This may include state-specific products, restrictions, compliance procedures, expenses, and tax rates.
According to the Urban-Brookings Tax Policy Report, New Jersey has the lowest recreational cannabis taxation and Alaska the most.
Since each state taxes cannabis differently, the problem is more complicated than it seems.
The authors’ preface notes this difference from alcohol, cigarette, and petrol charges.
A report was produced to help politicians, media, and community people understand cannabis tax discussions by describing each state’s cannabis tax structure, cannabis tax income, benefits and drawbacks of alternative cannabis taxes, and tax model goals.
Alaska has the highest taxes, largely because of its $50-per-ounce cannabis flower tax. Anchorage’s price excise tax adds $7.50.
Washington follows Alaska at $47.25 for a hypothetical $100 ounce, but the authors highlighted that the state’s cannabis prices are lower than the national average, so an ounce may cost less.
Because taxes are calculated as a percentage of the retail price, taxes will likely be lower.
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New York, Connecticut, and Nevada had the highest taxes at $45.37, $45.16, and $41.39 for a hypothetical $100 ounce.
New Jersey and Michigan had the lowest tax rates of $14.32 and $16, respectively, ranking bottom. New Jersey’s tax rate was 6.625% to help legal businesses compete with the illegal market.
Local New Jersey governments can apply a gross receipts tax on licensed merchants, distributors, and producers, which could lower the authors’ estimate.
The authors added a 2% gross receipts tax. Michigan has 10% excise and 6% sales taxes.