The question of whether individuals should be allowed to use drugs recreationally, particularly marijuana, has long been up for discussion. Advocates claimed that legalizing these drugs would reduce their availability on the black market. Prices would decrease, and gangs and organized crime, which have long benefited from the movement and sale of illicit substances, would decline.
However, this has not changed anything. Cannabis still retains the same legal status under federal law. According to the DEA, marijuana is still classified as a Schedule I restricted drug because there is no federally acknowledged medicinal use for it in the United States. Several states have ignored this position regardless of whether or not such an evaluation is accurate.
The Tax Foundation states that one of the most contentious political problems in the United States is the taxation of recreational marijuana. States may have quite different rates for excise and sales taxes on the same goods. A city’s own sales tax may also be added in some situations.
For instance, Washington state levies a sales tax of 37% on retail cannabis, while Virginia levies a tax of 21%, Montana levies a tax of 20%, Oregon levies a tax of 17% and Vermont levies a tax of 14%. In some states, wholesale and retail prices are both subject to excise taxes. Others charge tax based on how much product is purchased.
Any time there is an excessive tax rate on a good or service, some people will try to take advantage of the situation or go to the illegal markets.
However, there are other difficulties in addition to the extremely inflated tax rates. The application and approval procedures to become a licensed marijuana retailer can be somewhat onerous in some states. In some states, a license application may take months to complete the licensing procedure, only for it to be rejected. Vendors now have the option to forego the procedure and start selling the goods nonetheless, something that would be criminal. Furthermore, they are free to forego tax collection if they skip the licensing procedure.
The illicit market still exists, even if some states have improved their efforts to suppress it. Additionally, due to the nature of interstate commerce, the crime has spread to areas where cannabis use is still illegal.
According to the Oklahoma Bureau of Narcotics, since the state legalized commercial cultivation of medical cannabis in 2018, the state has grown to become the largest supplier of marijuana for the illicit market in the nation.
When the government becomes avaricious and begins to levy exorbitant taxes, it encourages an illegal market where there may be lax sanitation, quality control and safety standards. Once illicit merchants learn how to conserve money and make some savings, they become greedy as well, aiming to increase profits.
Greedy politicians constantly advocate for high taxes, which also encourage criminal activity or systemic fraud. Greed therefore breeds more greed, especially when it comes to cannabis.
Fortunately, the greed exhibited by both state and local governments as well as illicit cannabis industry actors does not affect the cannabis medicalization segment in which pharmaceutical companies such as IGC Pharma Inc. (NYSE American: IGC) operate because this particular space is regulated by the FDA, and the need for tax dollars doesn’t influence how the FDA does its work.
NOTE TO INVESTORS: The latest news and updates relating to IGC Pharma Inc. (NYSE American: IGC) are available in the company’s newsroom at https://cnw.fm/IGC
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
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