Arkansas lawmakers to again consider extending special tax on medical marijuana

Arkansas’ special tax on medical marijuana transactions sunsets in July, but the state Legislature will soon consider extending it for at least two more years.

The 4% excise tax generates millions annually for the University of Arkansas for Medical Sciences’ pursuit of recognition from the National Cancer Institute, known as NCI designation.

Since its 2017 inception, the tax — levied at the wholesale and retail levels — has bothered industry and patient advocacy groups. It is charged in addition to sales tax on a drug that a majority of Arkansans voted to consider medication in 2016.

In Arkansas and 48 other states, prescription medication is exempt from sales tax. Medical marijuana in Arkansas doesn’t require a prescription, but a patient must have written certification from a physician that they suffer from a qualifying condition to receive a cannabis patient ID card.

On the other hand, allowing the tax to expire in July would jeopardize UAMS’ NCI-designation efforts.

Lawmakers extended the tax without controversy in 2019 and 2021, and Sen. Jonathan Dismang (R-Searcy), who is sponsoring the current proposed extension, said this week he doesn’t expect this session to be any different.

The numbers

Arkansas’ medical cannabis sales and tax collection have far surpassed expectations. 

Since the first dispensary opened in the spring of 2019, Arkansans have spent roughly $800 million on medical marijuana, according to the Arkansas Department of Finance and Administration.

Dispensaries and cultivators have remitted more than $94 million to the state from the combination of Arkansas’ 6.5% sales tax and the 4% excise tax, said DFA spokesman Scott Hardin.

State budget officials in 2019 estimated the excise tax would produce roughly $2.5 million annually. However, the tax has raised more than $11.8 million a year — an amount that has grown each year since 2019, per state data.

The sales and excise tax revenues generated from medical marijuana fund the state’s cannabis regulatory programs first. The remaining revenue is then transferred to the UAMS National Cancer Institute Designation Trust Fund. 

NCI efforts

With better-than-expected revenues from medical cannabis sales, UAMS officials are hopeful the institution is on an accelerated track to receive NCI designation. 

UAMS Winthrop P. Rockefeller Cancer Institute Director Michael J. Birrer said in an interview the institution has several hurdles to clear before applying for the designation but is focused on two main ones: expanding clinical trials and community outreach.

Currently, UAMS has about 100 patients participating in clinical trials each year; the National Cancer Institute expects about 250 — a mark Birrer hopes can be attained within a year.

Next, he said community outreach and engagement will be critical. Last year, UAMS launched its patient navigator network, and Birrer said NCI is always looking for what unique programs new sites can bring to the table.

“Our niche is going to be rural cancer care because we are a rural state,” he said.

UAMS is also continuing to fundraise. To date, it has raised $22 million of its $30 million goal in philanthropic donations.

NCI designation is the top status for U.S. cancer centers. While there are 71 such centers in the nation, there are none in Arkansas, Mississippi or Louisiana.

NCI-designated institutions are research-focused and receive a bulk of NCI research funding.

UAMS has estimated that NCI recognition would bring $72 million to Arkansas each year and allow Arkansans to receive cancer treatments and screenings closer to home.

So how long until UAMS applies?

“I get this question every day: When will we apply for designation?” Birrer said. “I think we’re two years away,” pledging to move faster if possible.

A big factor will be medical marijuana tax revenue.

“It has been absolutely a god-send,” he said.