If you are a resident of a state where weed is only legal for medicinal use, you don’t have much choice. Without a medical marijuana card (MMJ card), you are breaking the law by using cannabis in one of these states. However, at the time of writing, weed is legal in nine states, plus D.C.
As you are legally allowed to walk into a dispensary in California (for example) and purchase up to an ounce of marijuana or eight grams of concentrated cannabis, why bother with an MMJ card? First of all, there is the small matter of possession limits, which are generally higher for MMJ cardholders. Then there is the small matter of lower taxes, which is the focus of this article.
Who doesn’t enjoy receiving a tax break? While the terms depend on where you live, most MMJ cardholders can expect to pay significantly less tax. To be clear, there is still some confusion over tax matters in the enormous state of California, which only legalized marijuana for recreational use in January 2018.
At this stage, MMJ cardholders don’t have to pay the ‘sales and use’ tax on weed purchased from a medical marijuana retailer. This also applies to purchases of cannabis concentrate, edibles, and topical products. To avoid paying this particular tax on weed, present your Medical Marijuana Identification Card (MMIC). Otherwise, you have to pay anywhere from 7.25% to 10% extra.
According to the terms of Proposition 64, the legislative measure which made weed legal for recreational use, buyers are hit with excise tax along with state sales and use tax and local taxes. As an MMJ cardholder, you pay at least 20% tax in most cases, but recreational users pay 40-45%!
There is a proposal to lower the sales and use tax to 11% until 2021. Here are the three different fees paid by California residents:
- Sales and use tax: This is a state tax which can be as high as 10% in some locations because certain jurisdictions add ‘district’ taxes which occasionally overlap. It is calculated on the combined total of excise tax and retail price, but you don’t pay it as an MMJ cardholder.
- Excise tax: This is another state tax; this time linked to the wholesale price. It usually costs 15% of the retail cost, and is unavoidable.
- Local tax: There are also cities and counties within California that tax retailers from 10% to 15%. As a consumer, you will receive a hit of at least 5%, and once again, even MMJ cardholders must pay.
In the state of Colorado, recreational users must pay the state sales tax, local sales taxes and an extra 15% state marijuana sales tax. If you have an MMJ card, however, you don’t have to pay the sales tax. It is a similar story in every state, which allows recreational and medicinal marijuana. If you go through the MMJ card process, you’ll normally (but not always) end up paying less tax, although the precise amount you’ll save varies from state to state.
How Much Can I Save With an MMJ Card?
Here is a quick look at the various taxes in the states which allow recreational and medicinal marijuana.
The state has no state sales tax, but if you are a grower, you have to pay $50 an ounce when selling to retailers or dispensaries. As a result, this cost is passed onto consumers in lieu of a sales tax. As weed costs around $300 an ounce in total, it is effectively a 20% tax rate. It costs $25 to apply and $20 to renew your MMJ card, along with an average cost of a doctor’s appointment ranging from $50 to $150. On average, an MMJ card costs $75, and you will need to purchase four ounces of weed a year for it to be worth your while.
We have already mentioned the tax savings in the Golden State, but there is also a product tax for growers of $2.75 per ounce of leaves, and $9.25 per ounce of flowers. A doctor’s appointment could cost up to $150, and it costs $33 to apply. The average cost of weed is around $250, and the price of a medical weed card is approximately $60. Overall, Californians would need to use over four ounces of marijuana per annum to justify the MMJ card cost.
As an MMJ cardholder, you avoid the sales tax but still pay other taxes such as the 15% excise tax. On average, you can expect to pay 27% tax, and good-quality Mary Jane is approximately $240 an ounce. When you consider the combined cost of a doctor’s appointment, renewal, and application, which is well over $200, you need up to eight ounces of weed a year to see savings with your card. That’s a lot of weed for a casual user.
The state legislature recently decided to impose a 10% sales tax on the value of marijuana and products derived from it for adult use. The 10% tax on retail weed will be repealed, and the excise tax is $94 per pound of trim, $335 per pound of flower or mature plants, $1.50 per immature seedling or plant, and $0.30 per seed. MMJ cardholders pay a minimum tax of 5.5%.
While application and renewal of an MMJ card are free, it costs $300 for a caregiver to apply. A doctor’s appointment can cost $300! With the high average cost of an MMJ card, Maine residents would need to buy 16 ounces in a year to justify the cost. That’s about one-eighth every three days!
The original ballot initiative placed excise tax at 3.75%, but it was increased to 10.75% in 2017. In total, users pay around 20% in tax, although medical patients don’t pay sales taxes. Even so, the cost of applying and renewal is $50 a piece, and a doctor’s appointment can cost $200. As weed costs up to $340 an ounce, you will begin saving money on tax as an MMJ cardholder if you purchase over five ounces a year.
At the time of writing, Nevada residents derive no financial benefit from owning a medical marijuana card. All users have to pay the 15% tax with no reduction if you have an MMJ card. In fact, getting a card costs you money because you have to pay $25 as a new patient, $75 for an ID card, $75 to renew, and up to $200 for a doctor’s appointment. Recreational users have none of these costs. However, as Nevadan dispensaries have reciprocity with other states, you can get a card from another state if you have residency in it.
Weed users pay a total of 17% in tax, but MMJ cardholders are exempt from the sales tax portion which is up to 8%. However, the high costs of renewal, application, and a doctor’s appointment (up to $200 each) means that having a medical card in Oregon may not be worth it. Weed costs just $210 an ounce on average, so you would need to purchase over 10 ounces a year to save money in the state.
While weed is legal for recreational use, it is still illegal to sell it recreationally.
This state has the highest tax rate at 37%, and it used to be 75%! Recreational users pay an extra 6.5%. Applying and renewing the card is free, but a doctor’s appointment costs up to $200. Overall, you would need to purchase 12 ounces of weed a year for an MMJ card to be worth it. But wait! You are only allowed to grow marijuana plants if you have an MMJ card, and you can carry three ounces of weed instead of the one ounce that recreational users are permitted. Once you figure out how to grow, you can save hundreds of dollars a year with your card.
Although you can use weed freely in D.C., you are not allowed to sell it recreationally. You can possess and grow it, however.
Final Thoughts on Medical Marijuana Savings
Strictly speaking, there is no ‘discount’ on medical marijuana, although some dispensaries do make it cheaper to purchase weed as a medical patient. In the majority of states where you can buy it medically or recreationally, you pay less tax when you present an MMJ card. As you can see from the overview, the savings you make depends on where you live.
For example, Nevada residents save nothing, whereas Maine pot smokers need to purchase up a pound of weed a year to make it worth their while. In contrast, residents of Alaska and California fare best as they only need to buy around four ounces a year to start saving. Your rate of consumption is all-important as far as saving money is concerned because you have to pay application, renewal and doctor’s fees. MMJ cardholders do enjoy other benefits, such as having the ability to grow or possess more.
Please note that all the numbers and prices in this article are subject to change due to supply, demand and state laws.