Introduction of the Marijuana Tax Equity Act of 2013by Representative Earl Blumenauer
Posted on 2013-02-05
in the house of representatives
Tuesday, February 5, 2013
Mr. BLUMENAUER. Mr. Speaker, today, I am pleased to introduce the
Marijuana Tax Equity Act of 2013, legislation to create a federal
excise tax on marijuana sales and move this industry out of the shadows
and into the daylight. Just over 106 million people live in a state or
local jurisdiction that has decided that some aspect of marijuana use
should be legally permitted. Eighteen states and the District of
Columbia currently allow for medical marijuana and two states, Colorado
and Washington, recently legalized the recreational use of small
amounts of marijuana.
National trends reflect those state efforts. More than 40 percent of Americans over the age of 12 have tried marijuana at least once and public opinion research reveals half of the U.S. population supports legalization. Yet even as states and local governments have taken the lead in finding legal arrangements for marijuana, millions of people have been caught in the justice system for marijuana offenses and more than 660,000 people were arrested for marijuana possession in 2011. At the same time, the federal government spends approximately $5.5 billion per year on incarceration and enforcement associated with federal marijuana laws.
In addition, many marijuana businesses around the country--despite operating in compliance with state or local law--are not allowed to deduct their legitimate business expenses and often are unable to make deposits or maintain accounts as a result of federal banking laws.
It is time for Congress to end the federal prohibition on marijuana, remove it from the Controlled Substances Act, and create a tax and regulatory framework, similar to the frameworks in place for alcohol and tobacco. This represents a unique opportunity to save ruined lives, wasted enforcement and prison costs, while simultaneously helping to create a new industry, with new jobs and revenues that will improve the federal budget outlook.
The Marijuana Tax Equity Act creates a taxation framework similar to that in place for the tobacco and alcohol industries. It imposes an excise tax of 50 percent on the first sale by a producer, generally the grower, to the next stage of production, generally the processor creating the useable product. Along the supply chain it requires occupational taxes for those operating marijuana businesses. Those who do not comply with the taxation laws face civil or criminal penalties similar to those in place for the tobacco industry. The bill requires the IRS to produce periodic studies of the industry and make recommendations to Congress.
As I work with my colleagues and with our stakeholders to move forward with this legislation, I emphasize that there remain significant questions and challenges. In particular, in the context of legislation, significant changes will ripple through the marijuana industry, with new products created, new business relationships developed, new consumer standards demanded, and wide variations in state and local laws. As this process evolves, we hope to work with the industry to ensure that the tax rate and framework appropriately reflects federal concerns and the needs of this developing industry. I am committed to ensuring that the legislation's terms are adequately tailored to reflect the realities faced by marijuana businesses and consumers in an ever-shifting market.
In addition, the medical marijuana industry has distinct concerns about safe access and those should be adequately addressed in the federal framework. Together with my colleagues, I look forward to continuing our efforts on ensuring safe access for patients within the context of an administrable tax and regulatory regime.
It is important to note that states will remain free to make decisions about marijuana policy. Paired with Representative Polis' ``Ending the Federal Marijuana Prohibition Act,'' this legislation establishes a starting point for laying out a federal regulatory and taxation framework for marijuana sales that are legal under state law.