States taxing medical-use marijuana costing patients, experts say

"We do things at times in government, though, that is meant just to grab money," one lawmaker said of taxing medical-use pot, the only "medication" subjected to such tariffs.

By Clyde Hughes
Pro-medical marijuana demonstrators rally in Oakland, California. File Photo by David Yee/UPI
Pro-medical marijuana demonstrators rally in Oakland, California. File Photo by David Yee/UPI | License Photo

June 4 (UPI) -- New Jersey lawmakers have passed a bill that would begin removing tax for medical-use marijuana, with an argument heard in many states nationwide -- no other medicines are taxed by state governments, so why is cannabis different?

The New Jersey Senate voted to pass the bill last week and sent it to the Assembly. The proposal, which would phase out the state's medical pot tax by 2025, appeared dead -- but was reintroduced after insistence from Sen. Robert Singer. The Senate proposal would also would expand the state's medical marijuana program.


"To add sales tax to medical marijuana is outrageous," he said. "We should not make a profit on helping people. It is outrageous."

Legal for medical use in New Jersey since 2010, marijuana continues to be taxed like non-medicinal items such as takeout food and liquor. Some opponents say, in some cases, the extra cost can make the difference between patients receiving treatment and going without it.


State Assemblyman John DiMaio introduced a bill to cut the tax immediately, with no phase-out, but his effort failed to gain needed support. DiMaio said the Senate bill, now in the Assembly, doesn't do enough.

"On top of that, patients don't get any kind of help from their health insurers to this type of medication. They are paying the full tilt," he said.

Attention to the issue is beginning to spread among other lawmakers in the state, which -- at 7 percent -- has one of the country's' highest tax rates for medical pot.

"It's been deemed medicine by law, even if I didn't agree with the law [legalizing medical marijuana] in the beginning," DiMaio said recently. "We shouldn't be taxing medicine. "We don't tax prescription drugs. We do things at times in government, though, that is meant just to grab money."

The majority -- for now, however -- say the money made off marijuana tax is too valuable, and in some cases is already earmarked for other areas. State Sen. Joseph Vitale said last month it would be fiscally irresponsible for New Jersey to drop the tax. He said he initially considered cutting it, but then saw "what the revenue numbers looked like."


"I agree medical marijuana should be treated on par with other pharmaceuticals," Vitale said. "But that being said, the immediate elimination would create another budget hole. That's not responsible."

New Jersey is among more than a dozen states that tax medical-use marijuana. New York also charges a 7 percent tax -- and Washington state charges a 37 percent sales tax on medical pot. Connecticut and Minnesota charge on a per-gram basis, while Rhode Island charges $25 per plant tag for patients or caregivers.

There are many states where medical pot is not taxed at all, including California and Oregon. Leland Berger, an attorney with the Oregon CannaBusiness Compliance Council, who helped draft the state's medical marijuana law, said that's how it should be.

"Cannabis patients are not healthy and are suffering from debilitating medical conditions," he said. "Sales taxes are regressive to begin with. To increase the price of medicine like medical marijuana on adults is just immoral.

"A lot of people using cannabis are not wealthy people."

Berger argues that medical marijuana is being taxed because of the politics involved with the substance, which was illicit in the United States for decades. Dr. David Nathan, board president of Doctors for Cannabis Regulation in Princeton, N.J., agrees.


"Although cannabis should be treated the same as other medications, the federal prohibition of cannabis prevents that from happening," Nathan said. "Our cannabis policy has been flawed since the federal government -- over the objections of the medical community -- outlawed it in 1937."

"[It] wasn't based upon scientific evidence, but rather upon a misguided and implicitly racist sense of morality about the choice of consenting adults to use a drug less harmful than alcohol, tobacco and other medications that were -- and still are -- perfectly legal."

Jason Childs, associate professor of economics at the University of Regina in Saskatchewan, said such taxation is having another effect -- pushing patients back to the black market, where pot was sold for decades.

"That's exactly what we're seeing in Canada," Childs said. "In some jurisdictions, the legal price is almost double the illegal price. We're estimating right now that [legal sales is] only capturing 10 to 15 percent of the market. Some 85 to 90 percent of cannabis sold in Canada still comes from the illegal market."

Unless more is done, in his state at least, DiMaio said waiting six years for the tax to be phased out -- if the proposed bill passes the Assembly and is signed by Gov. Phil Murphy -- will keep costing patients until then.


"I don't get it," he said. "[The tax] has been on the books for eight to nine years. I could somewhat understand if we were trying to get it up and running but that's long happened. The tax should be off right now."

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