Marijuana Tax Compliance Issues? RevHub Marijuana Manager is here to “Ease the Pain”
Jan 30, 2020
Over the past two decades, as 34 states have legalized the medicinal or recreational use of cannabis, many states have also implemented tax policies regarding its production and sale. While nine states exempt medical cannabis from taxes, the remainder apply a combination of sales and excise taxes to medical and recreational cannabis production and sales. In 2018, state and local excise tax revenues from cannabis, in six of the states that have legal recreational sales, are expected to exceed $1 billion for the first time, with an additional $300 million in sales tax revenue. As popular opinion and policies continue to shift towards legalization, allowing for legal taxable sales, states and revenue agencies will increasingly be faced with the need to effectively administer tax policies and ensure compliance.
While still not legal at the federal level, at the state level, legal cannabis production, distribution, and sale is highly regulated. There are several cannabis tracking systems (CTS) used by states to track commercial cannabis activity “seed-to-sale.” Seed-to-sale tracking systems track all activity related to the planting, cultivating, harvesting, testing, transferring, processing, and selling of cannabis. While these systems collect a vast amount of data that is helpful for regulating the cannabis industry, the ability of revenue agencies to effectively use this information for tax administration and compliance is often hindered because existing legacy integrated tax systems (ITS) are unable to integrate with a state’s CTS.
The inability of an outdated and inefficient ITS to integrate and easily access the data stored in a CTS leaves a revenue agency with less efficient and less reliable options to track cannabis sales and ensure tax compliance. When data is stored in hundreds of Excel spreadsheets being passed back and forth, or an agency relies on paper-only processes, it not only creates more work, but it also opens the process to errors and miscalculations. Maintaining and operating out of existing disparate systems can be time consuming, expensive, and subject to failure. These legacy systems and processes are not only outdated but are also segregated, lacking a consistent data flow making the systems susceptible to errors, redundant data entry, and poor data quality. These burdens not only impact tax administration for a growing revenue stream, but they negatively impact the ability to accurately forecast future revenue from cannabis specific taxes.
Revenue agencies need a solution that can act as both an intermediary between their ITS and the state’s CTS and leverage analytics to help with tax compliance and revenue forecasting. RevHub’s Marijuana Manager bridges that gap, giving a revenue agency streamlined access to the necessary data and providing analytic insights to increase tax compliance.
To learn more about how ASR Analytic’s RevHub Marijuana Manager can help your agency replace and revamp your disjointed legacy systems and provide analytics to help drive compliance, education, and revenue—contact us @ firstname.lastname@example.org