Uruguay will exempt marijuana from taxes

BY Dave Sloan  May 19, 2014 at 2:48 PM EST
Photo by Flickr user Coleen Whitfield

Photo by Flickr user Coleen Whitfield

With Uruguay’s intention to halt the smuggling of marijuana on the black market, the country will exempt all pot production and sales from taxes with in hopes of weakening illegal competition through price reduction.

“The principle objective is not tax collection,” Felix Abadi, a contractor working with Uruguay on marijuana tax structure, told Reuters. “Everything has to be geared toward undercutting the black market.”

Under the new policy, individuals will be allowed to buy up to 10 grams of marijuana at any local pharmacy at a price similar to the black market: between 85 cents to $1 per gram. In addition, President Jose Mujica will auction up to six licenses to produce cannabis legally, with the government looking into the possibility of producing its own marijuana on military-controlled land.

While other legal substances such as tobacco and alcohol are heavily taxed, marijuana will be left essentially untouched to prevent the price of marijuana from inflating; a stark contrast to U.S. states Washington and Colorado, who have imposed heavy taxes on recently-legalized pot sales.