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Maine Continues to Discuss Marijuana Legalization Details

3 min readBy: Morgan Scarboro

After Maine voters narrowly approved recreational marijuana in November and a partial recount in December, legislators in the state have been tasked with developing the new regulatory and taxation framework. The Committee on Marijuana Legalization Implementation released a draft committee bill in mid-September, and the Committee is holding a public hearing on the bill today, followed by two work sessions this week.

The ballot initiative passed last November included a 10 percent sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. , but has been changed in the draft bill. Committee chairs Senator Katz (R) and Representative Pierce (D) explained that the committee originally planned to create a new excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. based on weight that would amount to a 20 percent effective taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. rate when combined with the original 10 percent sales tax, but lacked the technical information necessary to do so, according to a letter released with the draft bill. In lieu of the new tax, they instead increased the sales tax from 10 percent to 20 percent.

Massachusetts, the only other state in the Northeast with legal recreational marijuana, also increased the tax rate on marijuana this summer, from an original maximum rate of 12 percent to a maximum rate of 20 percent.

The bill also specifies how the tax revenue will be distributed. Five percent of the revenue generated within each municipality by all marijuana stores and social clubs must be distributed to that municipality. One percent of statewide revenue will be distributed in equal amounts to each municipality that had a cultivation facility, manufacturing facility, marijuana store, or social club. Twelve percent of revenue will be transferred to the Adult Use Marijuana Public Health and Safety Fund, where it will be used for public health and safety campaigns as well as enhanced law enforcement training programs related to recreational marijuana use. The rest of the revenue will be deposited into the general fund.

There are a few other highlights in the bill. Medical marijuana will continue to be taxed at 5.5 percent, significantly lower than the recreational rate. The state will allow marijuana to be purchased in licensed drive-throughs and through delivery services. The bill also allows for marijuana social clubs, an area that’s been fuzzy for other states with legalized recreational use. Though Maine plans to permit social clubs, smoking will not be allowed because of the ban on indoor smoking; clubs will be limited primarily to allowing edible adult use products. The bill also establishes licensing requirements and fees and creates a relatively diverse Marijuana Advisory Commission, responsible for reviewing laws, submitting recommendations, holding public hearings, and reporting to the legislature.

Given that this is just a draft bill, it’s likely to change through this week’s public hearing and work sessions. Senator Katz has expressed a willingness to alter the bill, commenting, “We’ve got a lot of work to do yet on this bill. We’ve worked on it for months, but it’s a rough draft. There’s still a lot of unanswered questions that we have to work out. Some of those questions, we’re looking to the public for answers. We want to hear what they have to say. I’m sure it will be a vibrant discussion.”