Tax committee adopts majority amendment to change pre‑roll taxation, directs drafting of a defined pre‑roll excise rate
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Summary
After a lengthy hearing on how to treat cannabis pre‑rolls for excise tax, the committee advanced a majority amendment that keeps excise‑timing and other items and directs a new definition and flat excise rate for pre‑rolls, sending the language to MRS and staff for drafting and an effective date of 2027.
Facing a persistent dispute between Maine Revenue Services (MRS) and the cannabis industry over how to classify pre‑rolled cannabis products, the Joint Standing Committee on Taxation advanced a majority amendment to LD 19 42 that will create a dedicated pre‑roll excise category and set a flat excise rate to be included in draft language.
Maine Revenue Services deputy commissioner Anya Trundy briefed the committee on statutory definitions and enforcement: "Cannabis flower means ... the flower and the buds of the plant," she said, and noted that trim is a distinct statutory category. Trundy told members auditors had seen cultivators classify pre‑rolls as trim (a lower excise category) while market pricing and marketing showed pre‑rolls often contained flower and sell at premium prices. MRS’s audit work has led the agency to reclassify many pre‑rolls as flower for excise treatment in audits.
Industry witnesses pushed back. Sean O’Brien of High North said Metrc, the seed‑to‑sale tracking system, currently classifies pre‑rolls as trim and that in practice pre‑roll manufacture often uses leftover material that contains both flower and trim. "Every pre roll sold in Maine includes trim," O’Brien said.
Sponsor Representative Dan Sayre proposed taxing pre‑rolls proportionally by the mix of flower and trim in the product; staff and MRS expressed concern about operational complexity. Industry and MRS then discussed alternatives, including establishing a distinct pre‑roll excise rate per pound or per item. Committee members debated three options: proportional by weight, a new per‑product excise, or a flat collection approach similar to tobacco.
Senator Bruce Bickford moved the majority amendment that keeps the items to delay excise‑payment timing and to tax certain intoxicating hemp the same as cannabis, strikes the sponsor’s proportional‑weight approach, and directs staff to add a new pre‑roll definition and flat excise rate for pre‑rolls with a target effective date of Jan. 1, 2027. The committee voted to advance the amendment; Representative Quint and Representative White recorded dissenting votes. Staff will work with MRS and the sponsor during language drafting to set the precise rate and refine administration and enforcement approaches.
What’s next: Committee staff and MRS will draft statutory language establishing a pre‑roll definition and a flat excise rate. An effective date of Jan. 1, 2027, was discussed for the changes; language review and fiscal analysis were requested.
(Transcript note: committee discussion contains inconsistent numeric references to the suggested excise figure—committee instructed staff to reconcile drafting numbers during language review.)
