News and Insights

Updated: Recreational Marijuana 2016 Ballot Questions – Voters Say “Yes” in CA, ME, MA, and NV

Tax Development Nov 10, 2016

Voters in California, Maine, Massachusetts, and Nevada say “yes” to recreational marijuana initiatives. However, Arizona voted down its initiative.

California Proposition 64 will legalize marijuana usage for adults 21 years or older. Proposition 64 provides for state agency regulation and licensing of the industry. Local jurisdictions will be allowed to regulate and tax marijuana with certain restrictions. Retail sales of marijuana will be subject to a state excise tax of 15% on retail sales of marijuana. Further, it will create a state cultivation tax on marijuana of $9.25 per ounce of flowers and $2.75 per ounce of leaves. Sales of recreational marijuana will not start until January 1, 2018. As of November 9, 2016, medical marijuana will now be exempt from sales tax for those who have a medical marijuana identification card issued on a county-by-county basis by the California Department of Public Health and a valid government-issued identification card.

Massachusetts Ballot Question 4 allows the possession, use, distribution, and cultivation of certain amounts of marijuana by persons age 21 and older and would remove criminal penalties for such activities. It provides for the regulation of commerce in marijuana, marijuana accessories, and marijuana products and for the taxation of proceeds from sales of these items. Retail sales of marijuana and marijuana products will be subject to the state sales tax and an additional excise tax of 3.75%. Further, cities or towns could impose a separate tax of up to 2%. The proposed law takes effect on December 15, 2016.

Nevada Ballot Question 2 allows persons 21 years old or older to purchase, cultivate, possess, or consume certain amounts of marijuana, as well as concentrated marijuana. Further, such persons will be able to manufacture, possess, use, transport, purchase, distribute, or sell marijuana paraphernalia. The law also provides for the regulation and licensing of the marijuana industry. Wholesale sales of marijuana will be subject to an excise tax of 15%.

Maine Question 1 allows persons 21 and older to possess 2½ ounces of marijuana and marijuana products and grow up to six immature marijuana plants in their homes. It will remain illegal to use marijuana in public. It will provide for regulations for selling, producing, testing, and transporting marijuana and related products. Cities and towns have the option of prohibiting marijuana establishments and retail sales of marijuana, and marijuana products would be subject to the state sales tax of 10%. When Ryan first posted this tax development, the election was too close to call.

Arizona Proposition 205 would have allowed individuals 21 years and older to privately use, possess, manufacture, give away, or transport up to 1 ounce of marijuana, as well as grow up to six marijuana plants at home. Proposition 205 provided for regulations for licensing entities involved in cultivating, manufacturing, distributing, selling, and testing marijuana products. Local jurisdictions would have had limited authority to enact ordinances and rules to regulate marijuana and marijuana products. Retail sales of marijuana and marijuana products would have been subject to the state tax of 15%.

Most of the ballot initiatives also establish labeling requirements and prohibit marketing and advertising to minors, similar to that of the cigarette industry. California, Maine, Massachusetts, and Nevada join Alaska, Oregon, Washington, Washington, D.C., as well as the most noteworthy Colorado that have already approved recreational marijuana.

As we close out this year, 2017 should see more ballot initiatives regarding both medical and recreational marijuana. This is a fairly easy way for a state to raise revenue that will not be viewed as a tax increase.