Interesting WSJ article on US Federal Cannabis legalization

Cannabis Overhaul in Washington is Only Getting Harder

Article is a month old, but still very relevant.

When politicians are involved, it can only be complicated. Interestingly, this has nothing to do with partisan politics, it has everything to do with who stands to benefit and who could be impaired by Federal legalization.

As a Cannabis sector investor – nursing several small positions (that got smaller of the last couple months) I’d hoped I was bottom feeding but instead am now willingly bag holding – I want to understand the details of the holdup and this article has details regarding taxation, especially for high tax states where Cannabis is already legal.

Washington will also want a piece of the tax pie. A bill introduced by Senate Majority Leader Chuck Schumer this summer proposes a 10% levy that will increase to 25% within five years. This is tricky for states such as California and Washington that have effective tax rates of 36% and 47%, respectively, and already find it hard to compete with the black market, according to MPG Consulting. An alternative bill introduced by Republican congresswoman Nancy Mace proposes a lower 3% federal excise tax. “The federal government is coming in late…The worst thing it could do is cause a setback in the [legal] states,” says Ulrik Boesen, senior analyst at the Tax Foundation.

The second part of the paragraph above shows one idea for a workaround to the issue. But it’s probably going to get more complicated before a seemingly simple solution comes together in line with the wishes of a majority of Americans, which is to make this substance that is much less harmful than alcohol (IMO) legal across state lines.

I am holding US based MSO (multi-state operator) positions and waiting to increase them because the circus in Washington may go on indefinitely, but it’ll get resolved.

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