This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
viewpoints
Welcome to Reed Smith's viewpoints — timely commentary from our lawyers on topics relevant to your business and wider industry. Browse to see the latest news and subscribe to receive updates on topics that matter to you, directly to your mailbox.
| 1 minute read

Could Cannabis interstate commerce ease state tax burdens?

Friends, last week, Marijuana Business Daily published a piece I wrote about interstate commerce and the cannabis industry - “How interstate commerce could upend the marijuana industry”. (link)

Someone recently volunteered to me that the industry should be more focused on battling the burden of state taxation. Putting aside the fact that the state-legal industry has been quite vocal about the high cost of state and local taxes for a long time now (e.g., link), being a lawyer, the comment made me think about interstate commerce laws.

As I noted in the article, interstate commerce will likely affect wholesale rather than retail in the shorter-term. One crucial input into how that plays out could very much be - you guessed it – state and local taxes. If the overall cost of cultivation and processing is cheaper in one state due to lower taxes, the self-imposed barriers to transporting across state lines will no longer be there to keep that industry (and its taxes) from moving out.

Right now, it doesn’t appear to me that states have much incentive to lower taxes, even as the industry has lobbied for reduction and the cost of doing business remains high. Why lower taxes when you don’t need to? Perhaps interstate commerce could offer the industry the leverage necessary to change that.

Tags

cannabis, interstate tax, interstate commerce, marijuana legalization

Latest Insights