Marijuana is getting buried in paperwork

Posted on March 08 2016

Marijuana dispensaries may be legal in several states, but companies still have the struggle of dealing with excessive paperwork, especially when it comes to taxation.

 

Recreational marijuana is now “legal” in four states: Colorado, Oregon, Washington and Alaska. Whilst this represents a significant step forward in changing attitudes (and laws), there is still an undercurrent of resistance hidden within the tight controls of production and sale within these states.

 

A record of each plant must be maintained, beginning before the seed even sprouts, and it must be updated with every significant movement or activity involving the plant, business owners and their advocates within the industry say. Once a plant is processed for consumption and reaches a store, the authorities want to get their cut.

Now of course this is to be expected, and to an extent should be encouraged if you wanna avoid certain less legitimate dispensaries tarnishing the reputation of recreational marijuana, and the push towards towards legalisation in general. Only through the continued success of dispensaries within the four progressive states will other states be persuaded to follow suit, right?

The trouble comes when the excessive work (and taxation) prevents businessmen wanting to invest in the industry in the first place.  State taxes are often set considerably higher on legal marijuana than on other products, meaning the incentive to invest may well be reduced. In addition, the cost of the excessive paperwork and regulation structures are increasing overhead costs even further. 

“There’s definitely a great deal of regulation,” said Keith Stroup, legal counsel for the National Organization for the Reform of Marijuana Laws, known as Norml. “Most states that have legal marijuana have seed-to-sale” tracking rules. “It reflects the reality that marijuana has been illegal for 75 to 80 years.” 

The reality for Derek Peterson, chief executive of Terra Tech, the first publicly traded American marijuana grower, is “a significant burden from a manpower and data-collection standpoint.”

“A lot of banks won’t serve the industry,” Mr. Peterson said. That forces him to devote extra labor to “counting and organizing dollars on a monthly basis and cash on a daily basis to avoid shrinkage and theft,” he said. “The cash-management aspect is the most difficult hurdle any of us have.”

If ten years ago I was told that their would be legal recreational marijuana dispensaries, but due to excessive taxation and regulation they would be limited in number and have their prices forced up, I would have taken it. No mistake. But in the situation we are currently in, and looking forward, the next step is to see the marijuana industry grow and thrive, and such struggles impose and inherent ceiling on this progress. 

 

 

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