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2011-01895 Image for cannabis blog 3000x2000Following November’s election, most states have legalized cannabis for either medicinal or personal adult use. Voters in four states — Arizona, Montana, New Jersey and South Dakota — approved ballot measures legalizing cannabis for personal use for adults at least 21 years old. Mississippi and South Dakota legalized cannabis for medicinal use, with South Dakota becoming the first state to legalize medicinal and recreational use cannabis in the same election.

Arizona

Proposition 207 regulates adult-use cannabis and imposes a 16% sales tax to fund community colleges, infrastructure, public safety and public health programs. It allows localities to prohibit cannabis businesses through zoning and bans smoking marijuana in public places.

The Arizona State Board of Accountancy previously issued guidance to CPAs and CPA firms practicing in the cannabis space after the state legalized cannabis for medicinal use.

Mississippi

Initiative 65 allows physicians to recommend medical marijuana to patients with at least one of 22 qualifying health conditions. Patients may possess up to 2.5 ounces, and the measure sets the tax rate equal to the state sale tax, which is currently 7%.

Montana

Initiative 118 allowed the state to set the legal age to purchase marijuana and Initiative 190 put that age at 21. The Marijuana Legalization Initiative regulates the possession and sale of marijuana. It levies a 20% tax on non-medical marijuana with the revenue going to the state general fund, conservation programs, substance abuse treatment programs, services for veterans and local governments. The measure also expunges previous marijuana convictions.

New Jersey

Question 1 legalizes the possession and use of marijuana for adults at least 21 years old. The Cannabis Regulatory Commission, which regulates medical marijuana in the state, will oversee the regulation of adult personal-use cannabis. The measure also sets the tax on personal-use cannabis at the same rate as the state’s sales tax, which is currently 6%. Municipalities, through legislative authorization, may set an additional tax. 

South Dakota

Amendment A legalizes the possession and use of marijuana for individuals at least 21 years old. It allows adults to possess up to one ounce of marijuana for personal use and taxes marijuana sales at 15%. The state will use sales revenue for its general fund and  public schools. It requires the South Dakota State Legislature to establish a medical marijuana program by April 1, 2022.

Looking ahead to 2021

In addition to legislation required to implement these ballot measures, state legislatures will continue to separately consider marijuana legalization. For example, pre-filed Texas legislation would authorize using cannabis for medical purposes.

To help you confidently and competently support your clients, the AICPA & CIMA Cannabis Industry Conference will present sessions on a wide variety of other topics relating to accounting for cannabis. Join via livestream Dec. 7-8.

James Cox, Associate Director-State Regulation and Legislation, Association of International Certified Professional Accountants

Originally published by AICPA.org