What Are the Tax Benefits of a Medical Cannabis Card
There are many benefits to having a medical cannabis card. Most notably, in states where recreational marijuana is not legal, it makes marijuana easily accessible to those who could greatly benefit from it.
But even if you live in a state where recreational use is legal, it may be worth getting your hands on an MMJ card. Having a medical cannabis card offers a bunch of benefits, including lower product costs, access to licensed medical dispensaries, the ability to purchase higher quantities, and even lower taxes.
If you are contemplating whether you can visit a dispensary without a card, the answer hinges on the specific laws of your state and the nature of the dispensary in question. In the case of medical dispensaries, only individuals possessing a valid MMJ card are eligible to purchase cannabis.
On the contrary, recreational dispensaries are open to anyone aged 21 and above. If you’re looking to understand the tax benefits associated with having a card, note that you will require one to avail them. For an in-depth look at the benefits and drawbacks associated with having an MMJ card, consider exploring the pros and cons of medical marijuana card.
So, what are the tax benefits of a medical cannabis card?
Medical Cannabis vs. Recreational Cannabis: Tax Benefits
There are significant differences in the taxes charged between medical cannabis and recreational cannabis. As more and more states have legalized recreational use, taxes on the product have increased considerably.
On the contrary, many states have lowered or exempted taxes on cannabis products purchased with a medical cannabis card.
Typically, there are several tiers of taxes on cannabis products. This includes an excise tax, state sales tax, and a local tax on recreational cannabis. Depending on your state, recreational users pay excise taxes ranging from 1% to 37%, while those with an MMJ card only pay standard taxes.
In some states, taxes are waived with a medical cannabis card, meaning you don’t pay any taxes at all.
Tax Benefits of a Medical Cannabis Card: A Breakdown
Every state has different tax rates, so tax benefits vary depending on where you live. In general, the tax for medical cannabis cardholders is significantly lower than for recreational users.
For instance, in Arizona, recreational users have a tax rate of 21.6%, while those in possession of an MMJ card pay as little as 8% in taxes. In Colorado, taxes on recreational products increased from 10% to 15%. Meanwhile, medical cannabis card holders are exempt from the 15% excise tax, paying just 2.9% in taxes.
The tax benefits in Illinois are more noteworthy, where recreational users pay up to 31% in taxes (depending on product type), while those with an MMJ card are charged just 1%.
Currently, several states have exempted taxes on all medical marijuana products. In these states, the tax rate is 0%:
- New Hampshire
Of these states, Delaware, Louisiana, Minnesota, New Hampshire, Pennsylvania, and Utah do not yet allow recreational use. However, a few are expected to begin recreational sales in the next few years.
Washington is the most striking state regarding the difference in tax rates between recreational and medical use. While medical cannabis card holders pay no tax, recreational users are slapped with a staggering 37%.
The state with the lowest tax rate for recreational use (aside from those with a 0% rate) is Alaska at between 3 and 5%, depending on the municipality. Maryland’s is also comparatively low at 9%, while Missouri’s rate is between 6 and 12%, depending on the municipality.
California’s tax rate is comparatively high for recreational and medicinal users, at 23 – 28% for the former and 15% for the latter.
Ultimately, you will need to research your state’s cannabis tax laws for a more in-depth analysis of the tax benefits you reap from having a medical cannabis card. Laws and tax rates are constantly changing, so it’s worth keeping an eye on the matter.
Other Benefits of a Medical Cannabis Card
Aside from the tax benefits of a medical cannabis card, there are several other reasons you may want to be part of this “club.”
For starters, it gives you access to licensed dispensaries, which are held to higher standards than recreational stores. Since there are more stringent testing requirements for medical dispensaries, products are often cleaner and safer. Typically, you will find high-quality cannabis products in these dispensaries, so you don’t have to settle for subpar products.
Also, medical cannabis patients often have access to higher-potency marijuana products than recreational users. Many recreational stores adhere to state-specified potency limits, while medical dispensaries can sell higher potency products depending on the patient and their condition or symptoms.
Another benefit is using your MMJ card in states that offer reciprocity to your home state. Therefore, if you’re traveling and need access to cannabis products, you may be able to use your card in another state. This is especially helpful since it is illegal to cross state lines with cannabis.
Although many may assume that it’s pointless having a medical cannabis card in a recreational state, that couldn’t be more wrong. There are various benefits to possessing an MMJ card, most notably the tax benefits.
In most states, there is a big disparity between the recreational and medical cannabis tax rates. In all cases, the tax rate for medical cannabis card holders is lower than those who buy cannabis recreationally. This means that MMJ cardholders are paying less for cannabis.
Tax rates vary from state to state, and we’ve done our best to give you an overview of what to expect in each state. However, you may need to do a little research for a more in-depth view of your state’s tax benefits for medical cannabis cardholders.