Here is a quick look at local cannabis taxes in the eight states with legal recreational cannabis commerce.
A starting point is a State of Connecticut document that’s close to right: https://www.cga.ct.gov/2018/rpt/pdf/2018-R-0034.pdf
“Additional local taxes apply in all of the states except Maine. Local marijuana excise taxes may apply in municipalities in Alaska, Colorado, Massachusetts, and Oregon. Additional local sales taxes may apply in Alaska, California, Colorado, Nevada, and Washington in jurisdictions imposing such taxes.”
They missed local excises in California and Nevada, but I agree that Washington and Maine don’t have local excises. (Local sales taxes aren’t worth looking at.) [UPDATE 16 October 2019: WA lets localities add a that looks just like the WA excise tax, a percentage of price. Call it a sales tax or an excise tax: I don’t see the difference. So my distinction between sales and excise taxes is questionable.]
California is the state where local taxes are the biggest issue. Local taxes routinely pass when voters are asked about them. https://newrevenue.org/2016/11/10/5026/. Tax competition is a huge problem in California already. Berkeley just recently cut its tax in half. https://www.berkeleyside.com/2018/02/14/berkeley-halves-business-tax-recreational-cannabis. Lompoc recently decided not to impose taxes, the better to attract businesses. http://lompocrecord.com/news/local/no-new-taxes-lompoc-council-declines-to-put-additional-expenses/article_078cedb4-d7e2-5d90-83e1-6374e9d30998.html. There’s more on local tax theory, for a California audience, at https://newrevenue.org/2016/04/21/4692/.
Oregon has a three percent cap on local taxes, and virtually all localities collect that.
Alaska: Here’s an example:
“Marijuana Retail Sales Tax
“Subsequent to voter approval of Proposition 2 on April 5, 2016, authorizing a 5% sales tax on the retail sales of marijuana and marijuana products, the Administration proposed Anchorage Ordinance (AO) 2016-49, amending the Anchorage Municipal Code (AMC) by enacting Chapter 12.50 Retail Sales Tax on Marijuana and Marijuana Products.”
Nevada: Again, an anecdote:
“Nevada, where pot taxes reach up to 38 percent in the most heavily taxed municipalities, like Henderson and Las Vegas.
. . .
City Sales Tax
Us [NV]: Can vary from 2-4 percent
Them [California]: Can vary from 3-17 percent.”
The City of Aurora imposes both a retail excise tax of 4 percent and “a 5.0% city excise tax imposed on the average market rate of unprocessed retail marijuana.”
https://www.auroragov.org/UserFiles/Servers/Server_1881137/File/City%20Hall/Marijuana%20Regulations/Retail%20Marijuana%20Sales%20Tax%20Information.pdf. That 5 percent tax is de facto weight-based, not price-based, in cases of vertical integration. https://newrevenue.org/2017/07/23/is-colorados-new-marijuana-tax-leaky/
Colorado counties cannot tax, says the state’s Supreme Court: http://coloradocommunitymedia.com/stories/no-review-for-adams-county-pot-levy,251043
is more complicated: There’s an Oregon-like cap of 3 percent on the excise tax, BUT a “host agreement” fee that reminds me of the local fees in California that need to relate to some benefit the locality provides the business.
“Massachusetts lawmakers sweetened the deal for cities and towns earlier this year by raising the maximum local-option marijuana sales tax from 2 percent to 3 percent and allowing municipalities to extract an additional 3 percent of sales through user agreements with retailers.”
The proposed taxes break down as follows: 6.25 percent sales tax, state excise tax at 10.75 percent and local option tax of up to 3 percent that can be set by cities and towns.
“I anticipate most communities if not all will be at 3 percent,” said Rep. Mark Cusack, a member of small group of lawmakers who worked on the compromise behind closed doors at the State House.
Cities and towns could also receive an additional 3 percent through a community host agreement with a retail pot shop company.
“In addition, we also require as part of the licensing process that [retail pot shop companies] have a host agreement with the host community, but we cap that at 3 percent of gross sales,” he said. That could bring the total potential tax rate at 23 percent.
Here’s a Massachusetts host agreement:
What about Massachusetts’ unique ‘community host agreements’?
Local communities that accepted medical marijuana businesses have often enacted so-called “community host agreements.”
The agreements require businesses to pay a portion of their revenue – sometimes 5% or more – to cover costs that towns incur relating to marijuana businesses, such as extra police officers. The agreements are often perceived as a way for towns to unfairly gouge MMJ businesses.
The bill caps how much towns can demand of businesses at 3% of revenue, and the agreements can’t be longer than five years. Furthermore, towns must justify their revenue demands by showing how much money will be needed to cover costs related to marijuana businesses.
“It might be hard to justify 3%,” Krane said. “That’s a high standard to meet.”