In an attempt to sever the black market marijuana trade at the neck, Uruguay’s legal pot commerce will provide tax exemptions on cannabis production and sales.
Earlier this week, government officials announced that Uruguay’s plan to legalize marijuana would come with a number of tax shields that will enable the country to undercut the drug cartels. The government has concerns over weed being smuggled in from neighboring Paraguay, one of the leading cannabis producers in South America -- a potential detriment to the newfound pot program if not handled properly.
“The principal objective is not tax collection. Everything has to be geared toward undercutting the black market,” Felix Abadi, a leading tax consultant for the Uruguayan government, told Reuters. “So we have to make sure the price is low.”
Uruguay is just weeks away from auctioning the six licenses permitted to cultivate legal cannabis. In the meantime, the government is working on the logistics of becoming the first country in the world to legalize marijuana, one of which may include putting growers on land guarded by armed military personnel in order to eliminate the potential for the illegal trafficking of the country’s legal crop.
Although substances like alcohol and cigarettes are heavily taxed throughout Uruguay, government officials say the legal marijuana trade is expected, for the most part, to remain tax-free. Earlier this month, President Jose Mujica approved details of Uruguay’s legal marijuana commerce, which will allow citizens to purchase up to 10 grams of marijuana from local pharmacies at price comparable to the black market -- in the neighborhood of 85 cents and $1 per gram.
Uruguayans will also be given additional options for obtaining legal marijuana, including joining a smoking club, or the home cultivation of up to six plants. However, citizens will be limited to purchase of about 17 ounces of weed per year.