Taxes and finances around legal weed examined

DOVER — Even if Delaware lawmakers legalize marijuana, the federal government could still prove problematic, members of a task force studying legalization said Wednesday.

The Adult Use Cannabis Task Force, a group created to answer questions surrounding a bill that would allow recreational use of pot, spent two hours discussing the financial issues around legalization.

While eight states have legalized marijuana, it remains a Schedule I drug, meaning the federal government considers it to have “a high potential for abuse and the potential to create severe psychological and/or physical dependence.”

“Even a well-crafted tax law could potentially be subject to the whims of a powerful and motivated federal official,” Jamie Johnstone, an economist with the state, said.

U.S. Attorney General Jeff Sessions has been highly critical of cannabis, and many advocates fear he intends to crack down on the drug. Meanwhile, laws make it difficult for individuals involved in the legal marijuana business to conduct bank transactions.

Banks must inform the federal government when they believe a customer is involved in illegal activity, and “As a result of this fairly significant compliance, most banks are reluctant to provide services,” Delaware Banking Commissioner Robert Glen said.

The state has about 40 banks and 20 credit unions, and while none of the 13 banks regulated by the state are involved in the marijuana business, most of the entities are regulated federally, Mr. Glen said, meaning Delaware officials cannot say if any financial companies hold accounts for marijuana sellers or growers.

House Bill 110, which is currently awaiting a vote in the House of Representatives, would carry a per-ounce tax: $50 on marijuana flowers, $25 on immature plants and $15 on all other parts of the plant.

The main sponsor of the legislation is weighing changing that, however. One option includes basing the tax rate off the potency of the drug.

“If it does have a higher THC, should we charge more of a tax on that, just like if somebody goes into any liquor store in Delaware and buys moonshine, which is legal, they pay a higher tax on that moonshine,” Rep. Helene Keeley, D-Wilmington, said.

The effective tax on cannabis in the eight states with legal weed varies from 10 percent to 37 percent, according to Mr. Johnstone.

Supporters say the measure will bring in revenue, shrink the black market and allow use of a product they feel should never been banned to begin with. But opponents argue cannabis is a dangerous drug that, if legalized, will lead to more car accidents, use of harder drugs and higher costs for the state government.

Some of the other specific concerns raised at the past two task force meetings include whether companies can still fire employees for using marijuana and how legalization may impact the state’s medical marijuana program.

Attendees Tuesday noted there is no protected class for cannabis users, meaning they would be able to be fired. Rep. Keeley has said she does not want to diminish the medical marijuana initiative, and speakers said cannabis for individuals with a medical marijuana card would be less expensive than pot sold for recreational use.

The task force, on the urging of several organizations opposed to legalization, agreed to hold two extra meetings and extend the due date for the report from Jan. 31 to Feb. 28.

Gov. John Carney has expressed opposition to legalization in the past, but Rep. Keeley said she believes he is open to signing the proposal. A spokesman for the governor previously said in an email Gov. Carney “believes Delaware should continue to learn from other states before taking any additional steps, and looks forward to the findings of the task force.”

According to a 2016 poll from the University of Delaware, 61 percent of Delaware voters support legalization.

Rep. Keeley is hopeful the measure will pass soon after the final report is produced, potentially making Delaware the third state east of the Mississippi River — and the first outside of New England — with legal cannabis.

“If we don’t pass it in Delaware, they’re going to go to New Jersey and they will buy it within the next eight to 12 months where it will be legal,” Rep. Keeley said.

Reach staff writer Matt Bittle at mbittle@newszap.com

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