There could be a lot of dough to be made selling pot now that it is legal in several states.
That’s a relatively crass assessment of the budding cannabis industry quickly growing up to take its place among legitimate business enterprises. Yet that coming of age for potpreneurs or ganjapreneurs –the latter being the reference of choice by the Urban Dictionary and a variety of media outlets – comes with the grown-up duty of paying taxes and sharing income information with Uncle Sam. Those in the business aren’t exactly celebrating this milestone.
For example, Washington State now enters its second year of legalized recreational marijuana. Yet, the bulk of pot professionals there say they aren’t making a profit in their business.
James Lathrop owns Cannabis City. It is Seattle’s first legal marijuana store. In 2014, his store did in excess of $3.1 million in sales. Not too shabby for a new business. But Lathrop’s federal tax responsibility for the product moved through his store tops $510,000. That staggering number actually pales in comparison to what the state has assessed him: $778,000.
“I am basically doing this for free,” Lathrop told the Associated Press. “Nobody’s gone out of business, but I’m not driving a new truck either.”
It is because along the federal Justice Department’s guidance for marijuana enforcement issued in Aug. 2013 that acknowledged state rights to let voters decide whether to legalize medical and recreational marijuana came with a hefty price tag in the form of excise taxes that make alcohol’s burden look paltry.
Pot grown in Washington State is charged a 25 percent tax each time the product changes hands from grower to processor to distributor. State and federal laws allow that cost to be passed on to consumers, but it has nonetheless created a burden that entrepreneurs in this blooming business aren’t taking lightly. They are fiercely complaining; they are demanding a change in the taxation structure. In addition, marijuana retailers are required to pay federal income tax on the tax money the state collects from their pot sales. It is a double whammy that when totaled for 2014 dumped $70 million in to state coffers in The Evergreen State.
A similar story is told in Colorado where recreational marijuana sales in 2014 netted the state $44 million.
Alaska and Oregon – the two other states to have given the green light for the legal sale of recreational marijuana – are closely watching how the experience of Colorado and Washington unfolds.
In Alaska, where the “Last Frontier” spirit and mentality lends toward an angst against additional regulation, that green light is still stuck at a cautious yellow.
In Nov. 2014, 53 percent of voters said yes to legalizing sales of recreational marijuana, but the state set up a waiting period designed to create some sort of regulatory board as well as determine the limitations on sales. Currently, it is legal for an adult 21 years of age or older to own as many as six plants with only three flowering at the same time as well as up to one ounce of harvested product. It is legal to smoke in the privacy of one’s home, but not in public and most certainly not on school properties.
Sales won’t be legalized until sometime in 2016.
The delay has eager wanna-be pot professionals anxiously awaiting the ins and outs of legalized sales in Alaska.
Jessica Jansen of Eagle River is one of those folks waiting. Eagle River is a bedroom community technically part of the Municipality of Anchorage but located on the other side of the Chugach Mountains and the military bases that gives the hamlet with 40,000 residents a sense of separation and rural independence. Residents there fought to maintain zoning regulations that allow small scale farming a couple years ago when the muni was revamping its zoning laws.
Jansen, her husband, Andy and their children live on a small farm and raise a significant portion of their food themselves. This includes cannabis that Jessica uses to ease anxiety and depression instead of taking pharmaceutical pills.
She is also the vice president of the Alaska Cannabis Growers Association and she has an entrepreneurial drive that has her already mapping out a 5,000 square foot growing facility on her family farm.
She is concerned that the newly appointed state Marijuana Control Board will pattern its regulations and limitations similar to that of what is in place for alcohol consumption.
“Right now, they essentially have not rules in place except for what was written in Ballot Measure 2,” Jansen said. “So we are still waiting to find out what the regulations will be. I don't want to see limited licenses and I don't want to see the government control the cannabis market.”
Jansen is concerned that any limits on production imposed by state authority will create a marketplace with an inaccurate balance between supply and demand.
While she stresses that she herself is not selling pot on the black market because she wants to stay clean to operate a legitimate business, she does know of current pricing. It’s about $300 for an ounce and $40 for an eighth of that. Jansen’s educated guess lines up with pricing Narcotic News – a pharmaceutical journal – provided in February 2015 with pricing for a pound of quality Alaskan grown marijuana selling on the illegal market for anywhere from $2,500 to $4,000.
These pricing estimates are relatively easy to acquire as Alaskans have embraced being tokers. The state has some of the highest rates of self-reported usage including 13 percent of 12-year-olds claiming they’ve smoked it, as per the results of the 2012 National Survey on Drug Health and Usage.
This doesn’t surprise Jansen who said, “There are more Alaskans that smoke marijuana than don’t. Pretty much my entire family and friends are cannabis friendly.” She sees a capitalistic opportunity and is ready to engage in that aspect of the American dream: owning her own business.
Transforming Alaska’s current marijuana producers and consumers in to law-abiding citizens legally growing and partaking in recreational marijuana is expected to add significant jingle to state coffers that aren’t as full as they used to be due to declining oil prices.
While the state’s Department of Revenue is not making any economic forecasts, the Marijuana Policy Group based in Denver, Colo., is. Their report estimates current Alaskan marijuana consumption to be 18 metric tons per year. Based on this estimate, first-year legal sales could be worth $55 million – a total that would add $23 million to the state’s budget.
At least seven other states are giving their voters an opportunity to say yah or nay to legal pot. Arizona, California, Hawaii, Maine, Massachusetts, Missouri and Nevada each have differing ballot measures for the fall electoral season.
With recreational marijuana now legal with the District of Columbia, perhaps even the federal government will take a friendlier stance toward the naturally-growing plant and repel the ironically misspelled Marihuana Tax Act of 1937. Doing so might make a healthy dent in the national debt or at least help balance the budget: In Sept. 2014, NerdWallet – a personal finance site – estimated the federal government would collect an additional $3 billion per year if all 50 states legalized recreational marijuana.
That’s a relatively crass assessment of the budding cannabis industry quickly growing up to take its place among legitimate business enterprises. Yet that coming of age for potpreneurs or ganjapreneurs –the latter being the reference of choice by the Urban Dictionary and a variety of media outlets – comes with the grown-up duty of paying taxes and sharing income information with Uncle Sam. Those in the business aren’t exactly celebrating this milestone.
For example, Washington State now enters its second year of legalized recreational marijuana. Yet, the bulk of pot professionals there say they aren’t making a profit in their business.
James Lathrop owns Cannabis City. It is Seattle’s first legal marijuana store. In 2014, his store did in excess of $3.1 million in sales. Not too shabby for a new business. But Lathrop’s federal tax responsibility for the product moved through his store tops $510,000. That staggering number actually pales in comparison to what the state has assessed him: $778,000.
“I am basically doing this for free,” Lathrop told the Associated Press. “Nobody’s gone out of business, but I’m not driving a new truck either.”
It is because along the federal Justice Department’s guidance for marijuana enforcement issued in Aug. 2013 that acknowledged state rights to let voters decide whether to legalize medical and recreational marijuana came with a hefty price tag in the form of excise taxes that make alcohol’s burden look paltry.
Pot grown in Washington State is charged a 25 percent tax each time the product changes hands from grower to processor to distributor. State and federal laws allow that cost to be passed on to consumers, but it has nonetheless created a burden that entrepreneurs in this blooming business aren’t taking lightly. They are fiercely complaining; they are demanding a change in the taxation structure. In addition, marijuana retailers are required to pay federal income tax on the tax money the state collects from their pot sales. It is a double whammy that when totaled for 2014 dumped $70 million in to state coffers in The Evergreen State.
A similar story is told in Colorado where recreational marijuana sales in 2014 netted the state $44 million.
Alaska and Oregon – the two other states to have given the green light for the legal sale of recreational marijuana – are closely watching how the experience of Colorado and Washington unfolds.
In Alaska, where the “Last Frontier” spirit and mentality lends toward an angst against additional regulation, that green light is still stuck at a cautious yellow.
In Nov. 2014, 53 percent of voters said yes to legalizing sales of recreational marijuana, but the state set up a waiting period designed to create some sort of regulatory board as well as determine the limitations on sales. Currently, it is legal for an adult 21 years of age or older to own as many as six plants with only three flowering at the same time as well as up to one ounce of harvested product. It is legal to smoke in the privacy of one’s home, but not in public and most certainly not on school properties.
Sales won’t be legalized until sometime in 2016.
The delay has eager wanna-be pot professionals anxiously awaiting the ins and outs of legalized sales in Alaska.
Jessica Jansen of Eagle River is one of those folks waiting. Eagle River is a bedroom community technically part of the Municipality of Anchorage but located on the other side of the Chugach Mountains and the military bases that gives the hamlet with 40,000 residents a sense of separation and rural independence. Residents there fought to maintain zoning regulations that allow small scale farming a couple years ago when the muni was revamping its zoning laws.
Jansen, her husband, Andy and their children live on a small farm and raise a significant portion of their food themselves. This includes cannabis that Jessica uses to ease anxiety and depression instead of taking pharmaceutical pills.
She is also the vice president of the Alaska Cannabis Growers Association and she has an entrepreneurial drive that has her already mapping out a 5,000 square foot growing facility on her family farm.
She is concerned that the newly appointed state Marijuana Control Board will pattern its regulations and limitations similar to that of what is in place for alcohol consumption.
“Right now, they essentially have not rules in place except for what was written in Ballot Measure 2,” Jansen said. “So we are still waiting to find out what the regulations will be. I don't want to see limited licenses and I don't want to see the government control the cannabis market.”
Jansen is concerned that any limits on production imposed by state authority will create a marketplace with an inaccurate balance between supply and demand.
While she stresses that she herself is not selling pot on the black market because she wants to stay clean to operate a legitimate business, she does know of current pricing. It’s about $300 for an ounce and $40 for an eighth of that. Jansen’s educated guess lines up with pricing Narcotic News – a pharmaceutical journal – provided in February 2015 with pricing for a pound of quality Alaskan grown marijuana selling on the illegal market for anywhere from $2,500 to $4,000.
These pricing estimates are relatively easy to acquire as Alaskans have embraced being tokers. The state has some of the highest rates of self-reported usage including 13 percent of 12-year-olds claiming they’ve smoked it, as per the results of the 2012 National Survey on Drug Health and Usage.
This doesn’t surprise Jansen who said, “There are more Alaskans that smoke marijuana than don’t. Pretty much my entire family and friends are cannabis friendly.” She sees a capitalistic opportunity and is ready to engage in that aspect of the American dream: owning her own business.
Transforming Alaska’s current marijuana producers and consumers in to law-abiding citizens legally growing and partaking in recreational marijuana is expected to add significant jingle to state coffers that aren’t as full as they used to be due to declining oil prices.
While the state’s Department of Revenue is not making any economic forecasts, the Marijuana Policy Group based in Denver, Colo., is. Their report estimates current Alaskan marijuana consumption to be 18 metric tons per year. Based on this estimate, first-year legal sales could be worth $55 million – a total that would add $23 million to the state’s budget.
At least seven other states are giving their voters an opportunity to say yah or nay to legal pot. Arizona, California, Hawaii, Maine, Massachusetts, Missouri and Nevada each have differing ballot measures for the fall electoral season.
With recreational marijuana now legal with the District of Columbia, perhaps even the federal government will take a friendlier stance toward the naturally-growing plant and repel the ironically misspelled Marihuana Tax Act of 1937. Doing so might make a healthy dent in the national debt or at least help balance the budget: In Sept. 2014, NerdWallet – a personal finance site – estimated the federal government would collect an additional $3 billion per year if all 50 states legalized recreational marijuana.
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