Marijuana Tariffs – The Future of Interstate Cannabis Trade and Social Justice Mandates?

Many states have mandates to protect businesses with social justice and economic empowerment, so tariffs are the answer?

In the next few years, will you go to a Massachusetts or Florida pharmacy and see Oregon Grown White Widow or Emerald Triangle Blue Dream, but at three times the price of locally sourced and grown cannabis from that state?

Don’t laugh, but marijuana tariffs may be the future.

The idea came about during a show titled “It’s Probably Legal to Ship Marijuana Across State Borders Due to the Dormant Trade Clause in the Constitution,” attended by Professor Mikos of Vanderbilt University and Steven Hoffman, director of the Massachusetts Cannabis Control Commission . During one of the segments, Mr. Hoffman said voters agreed to a mandate that said he must protect local businesses and social marijuana businesses in the state of Massachusetts. (Paraphrased). Curt Dalton of Cannabis.net then asked, “Well, if the social equity grower in California is struggling with oversupply and the social equity grower in Massachusetts can’t grow enough cannabis to meet the state’s demand, then who is more important to the social equity business? Who is protected and who is left to their own devices in the free market? “

Does the Dormant Trade Clause Protect Interstate Marijuana Sales?

One solution we may see in the future to solve this equation is interstate tariffs on cannabis. Tariffs, in case you are not familiar with how they work, according to Wikipedia as follows:

A duty is a tax levied by a government of a country or a supranational union on the import or export of goods. In addition to a source of revenue for the state, import duties can be a form of foreign trade regulation and policies that tax foreign products to promote or protect domestic industries. Along with import and export quotas, tariffs are one of the most widespread instruments of protectionism.

In general, tariffs are levied internationally and put in place by countries to protect their local manufacturers, businesses and producers. If you’ve heard the term NAFTA, the North American Free Trade Act, or TPP, Trans-Pacific Trade Partnership, then you may be familiar with tariffs. One country levies a tax on an IMPORTED product that can compete with local businesses to encourage consumers to “buy locally”. The duty or tax is added to the price of the imported product, thereby increasing the price of the imported good for the local consumer while making the local product more competitive at the checkout. Industries such as the wine industry, auto parts and manufacturing, technology, and agriculture are large areas of international tariffs. Imports like cars, smartphones, soybeans, etc. are all covered by trade agreements or, in some cases, trade wars.

The long-term future of cannabis can certainly lead to tariffs. or at least cannabis, which is included in trade deals like NAFTA or TPP, because countries with warm climates and low labor, electricity and water costs can grow and produce cannabis at a fraction of the cost North American growers have to spend to get the same amount of marijuana to produce.

Before international rules and pacts are made, international trade within the US can impose some form of marijuana tax or tariff to protect small businesses in cannabis-importing states (MA, FL, AZ) from the massive supply hitting the market could market if cannabis surplus states (CA, OR, CO) could legally ship their products across the country.

If Massachusetts has a legal mandate to protect candidates for social justice and economic empowerment, as Mr Hoffman says, then how can you bring cannabis into your state from high surplus states without the local growers and the SE and EE companies to go bankrupt? Tax it!

While states do not have the inherent authority to impose a duty or tax on a non-state product, the federal government could find ways to give states some authority over this fact by rationally invoking social justice and economic empowerment. A long shot, but not yet nationwide with cannabis, who knows?

If federal law is changed to allow interstate shipping of cannabis, or as Professor Mikos says here in this interview, that due to the dormant trade clause in the U.S. Constitution, it’s likely already legal to ship marijuana across state lines, then Mr. Hoffman has to allow marijuana imports into Massachusetts, but he must also comply with the mandate on Question # 4 that Massachusetts voters voted and approved to legalize cannabis in his state.

A tax on marijuana out of state seems the obvious answer. Put an additional 50% tax on cannabis that is not grown or grown in Massachusetts. If you want Colorado’s Emerald Triangle OG Kush or Blue Dream it can be bought federally, it will only cost you more than “import”. The tariff should be set so that the price is competitive with what local producers can market a product for and that the consumer could tolerate for a “premium import”. Remember, we’re talking about marijuana here, not BMWs and Mercedes.

If the cost of 1/8 of locally grown marijuana in Massachusetts is $ 35 plus tax, then the tariff or tax on 1/8 of Emerald Triangle weed should charge a rental, subtly urging the consumer, ” buy locally ”and save money. What if the 8th emerald triangle cost $ 45? This is how tariffs work in most cases, not so ridiculous that no one in America can buy a Mercedes or BMW, but expensive enough to qualify as a “luxury car”. The marijuana industry has already adopted the “affordable luxury cannabis” brands, as you can read here, so it won’t be difficult or unjustified to create consumer demand. Cannabis brands nicknamed “Reserve”, “Exotik” and “Limited Batch” are already appearing on the marketing pages of many MSO brands.

Interstate marijuana tariffs aren’t that far-fetched idea when states are legally required to protect local and minority-owned businesses. If you walked into a Florida or Massachusetts pharmacy and had locally grown ounces of cannabis for $ 300 and imported Emerald Triangle ounces for $ 375, you seem to create enough deterrent for most consumers to “buy out” the imported brand , but also a high-end market where consumers with sufficient disposable income want a more exotic variety they can buy. You want Chong’s Choice at Snoop Leaf’s in Florida, no problem, just willing to pay more for it than the pharmacies’ white label brand.

As mentioned in the article “Brands Won’t Win the Marijuana Brand War, Growing Locations Will Be Big Winners”, the area where the actual cannabis plant was grown will cost a much higher price in the future, not the image of fame the front of the packaging. In this case, geographic-based tariffs will certainly come as a “route to the same playing field”. Want Kentucky Indica or a nice Jamaican black volcanic soil pre-roll? Pay, sir.

Federal law could soon give consumers a choice, but state mandates might require some intervention to protect local marijuana businesses, at least in states that are not cannabis-surplus.

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