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Maine, Medical Marijuana and Sales Tax

  • Nov 8, 2011 | Susan McLain

It seems the sales tax issue regarding medical marijuana can get complicated. The Maine Revenue Service (MRS) is looking to increase the sales tax of marijuana brownies to the higher rate applied to restaurants and prepared food.

It is the MRS opinion that a food product containing medical marijuana cannot be considered a grocery staple as it isn’t consumed ordinarily for human nourishment and is merely an alternative form of delivering the medical marijuana to the body. Based on Maine Revenue Services interpretation of the current law, that means it is taxable at the higher rate. It is the opinion of Peter Beaulieu, director of the Sales, Fuel and Special Tax Division at Maine Revenue, that it would take legislative action to exempt medical marijuana from the higher sales tax rate.

This doesn’t go over so well. The flip-side argument is that the brownie is the delivery mechanism, much like encapsulated powdered medication into a pill, and should be exempted like other prescription medications. In addition to that argument, Paul McCarrier, board member of the Medical Marijuana Caregivers of Maine, says that “…for some individuals, eating foods that contain medical marijuana is the best way for them to use the medicine. He said smoking or using vaporizers does not work for everyone and patients should not have to pay an extra tax in order to use medicinal marijuana.”

It appears that where medical marijuana brownies sits within the sales tax sphere of definitions for the purpose of paying sales tax is being contested. Is it a food item? Is it a prescription medication (with a unique delivery method)? Or is it to be considered a prepared food item?

Stay up with all the recent happenings in sales tax law and don’t let your business fail to employ the correct sales tax for each product.

Learn more about AvaTax for end-to-end sales tax management and compliance. www.avalara.com / 877-780-4848.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”