Hawaii Mulls Raising Taxes on Fledgling MMJ Program

Lawmakers in Hawaii are considering raising taxes on medical marijuana to help cover some the of costs associated with setting up the state’s MMJ program, but many are worried that a tax hike will hurt the very people who can least afford it: the patients.

State Rep. Della Au Belatti, chair of the House Health Committee, supports a so-called “Use Tax” on MMJ, on top of the existing general tax.

“We need to have that conversation, because we know that there are associated costs with setting up the medical marijuana program,”Belatti told Hawaiinewsnow. “There is a delicate balance that we’re trying to strike.”

The amount of the proposed tax increase is still unknown.

Opponents of the tax hike worry about the medical marijuana patients. There are over 13,000 MMJ patients in Hawaii, out of the state’s 1.4M population.

Medical marijuana is not covered by insurance, therefore many feel sales tax should not apply, since it is considered a medicine.

“There’s a lot of built-in cost into the infrastructure [including] making sure we have the perfect product safety, public safet, and patient safety. Once you start tacking on some additional fees and taxes, at that point, some of that may end up getting borne by the qualified patients,” said Blake Oshiro, who represents the Hawaii Educational Association for Licensed Therapeutic Healthcare.

But state legislators say the additional money is needed to help set up the industry and meet requests coming from various departments.

An example they use: the State Tax Department requested about $600,000 for security improvements and more staff at its offices to handle the influx of cash that will be delivered from the state’s eight dispensaries.

Sound like a banking problem? It is.

Because marijuana is illegal under U.S. law, banks have to comply with federal regulations.

“Marijuana in general is still a controlled substance on the federal level, so they have limited to no banking services. We expect that they will pay all their taxes in cash,” said Mallory Fujitani, a spokeswoman for the State Tax Department.

There have been estimates, according to the Honolulu Star, that dispensaries will be paying up to $400,000 in taxes every month.

“We need additional guard service as well as armored car service. Fujitani said. “And our cameras and our door accesses, just controls with inside the building for the safety of our employees.”

The department has hired a security consultant, and officials are speaking with other states who have been handling marijuana cash for years.

Hawaii has had medical marijuana since 2000, although until recently, when the state began to issue dispensary licenses, patients had no way to buy it.

“The public should not be afraid of this coming change, and our objective is to make this as seamless as possible,” said Fujitani.

Let’s hope so. It has already been a long wait for medical marijuana patients in Hawaii.