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Medical Cannabis: Understanding the Money Piece – Taxes and Fees

Published 17/02/2018 in Cannabis - 0 Comments

What’s the cost of legitimacy? It’s a question for many with medical cannabis-related businesses in Montana. SB 154 had a hefty tax in it, 10% of gross. It would’ve generated a lot of revenue. In other legislative sessions, grabbing that cash and taxing businesses for which there is some public disapproval of would’ve been an easy road for everybody.

But this is a “no taxes” legislative body – even when it comes to cannabis.

Fees, however, are another issue. For example, the spelling is different.

But whether it’s taxes or fees, it looks the same to a company bottom line. It’s an expenditure. Administratively and structurally, however, taxes and fees are different. Taxes pull money out of the system in places that tend to be related to an activity – a sale or a purchase or production. Fees tend to have more of a “pay to play” nature. A professional licensing fee gives you permission to do your job. A premises licensing fee gives you the right to do your job in a particular location. The licenses themselves can assure professionalism, depending on what they require. They can set standards. For example, if to get a license to grow cannabis you can’t have a drug felony and you must be a state resident for at least a year, those are standards you must meet for your license.

Likewise, the work environment, the “premises,” will have to meet standards that assure the general health and safety of the public and the people who work there. The environment must also be appropriate for the task.

But whether taxes or licensing fees, the collected dollars are directed by the legislature to pay for specific things. First and foremost, the legislature will direct those dollars to support the expenses the governing agency incurs to oversee and administer regulations. This means paying the employees who generate the paperwork, do inspections, build computer infrastructures, etc. And, of course, they’ll take a piece for overhead, too.

In SB 154, a portion of the taxes collected was to be directed at supporting community-based senior programs. These programs were funded with federal stimulus dollars last legislative session, which means they have no funding source now. SB 154 sponsor Senator Dave Lewis intended to steer some cannabis revenue in that direction to make up for the lost funds.