Vermont publication 7 days reports
The bill that would create a retail cannabis market in Vermont is on the move again — this time, with a new tax structure.
On Wednesday, the House Ways and Means Committee voted 7-3 to advance S.54 with a 20 percent tax on all retail cannabis sales. The state tax figures align with those in Massachusetts, which set up an adult-use cannabis market in 2018, said chair Rep. Janet Ancel (D-Calais).
“We felt that 20 percent … is a good place to land,” Ancel said after the vote. “I think there might be some tolerance for it being a little bit higher than that, but not much.”
The version of the tax-and-regulate bill that passed the Senate last session would have levied a 16 percent state excise tax on marijuana sales and allowed municipal governments to charge an additional 2 percent local option tax.
The new structure now proposes a 14 percent excise tax designated for the general fund, and a 6 percent sales tax for the education fund. Based on those figures, the state could expect annual revenues from $9.1 million to $17.7 million once it is five years into the market, according to the Vermont Joint Fiscal Office.
Meantime, municipalities would not be allowed to impose their own taxes.
Explaining that decision, Ancel opined that directing taxes to the Education Fund benefits taxpayers more than allowing a patchwork of individual towns to levy their own taxes, especially considering how Vermont’s retail patterns do not “fall neatly within town lines.”
“We’re not looking at an awful lot of revenue coming in,” she added.
Removing the local option tax didn’t sit well with the Vermont League of Cities and Towns, which has previously called for rates as high as 5 percent. Karen Horn, a league lobbyist, urged lawmakers to at least allow municipalities to reap some benefits.
“We don’t believe that a 2 percent local option tax will depress retail sales of marijuana or marijuana products,” Horn said. “Nor do we believe that it will depress the revenues coming [to] the state.”
Localities and lawmakers have frequently been at odds over what a retail cannabis market should look like. Some local leaders have already passed bans on sales ahead of any anticipated legislation. Without the lure of a local option tax, Horn warned, more towns would be disinclined to allow sales.