In Colombia, after years of numerous demands and efforts from the private sector, the medicinal and industrial uses of the cannabis plant have been authorized. As expected, these are two activities with great potential, which have indeed contributed to local finances, especially through tax payments.

A Colombian company must bear taxes such as income tax, value-added tax (VAT), tax on commercial, industrial, and service activities (ICA), as well as charges on property or land ownership and import tariffs, among others. Naturally, as in other legal systems around the world, Colombia also has tax-exempt or non-income-generating revenues, as well as goods and services excluded or exempt from VAT or ICA payments, as the case may be.

Revenue on the rise, but still insufficient

According to statistics from the National Directorate of Taxes and Customs (DIAN), in the last quarter of 2024, the government's revenue had its main source in mandatory income tax withholdings, followed by sales tax. By the end of the same year, DIAN reported a total revenue of approximately COP$ 267 billion, mostly composed of domestic taxes (84.6%), while taxes on foreign trade amounted to about COP$ 41 billion (15.4%).

A significant portion of these fiscal contributions was allocated to the payment of the national public debt. The remainder was allocated to areas such as education, health, defense, and finance. Despite more ambitious revenue targets being set year after year — and the current government making relevant announcements to combat tax evasion — resources continue to be insufficient. In light of this, President Gustavo Petro signaled the intention to implement a new tax reform.

Cannabis sector could boost revenue

In this context of changes, it would be wise for the Colombian government to consider strategic sectors, such as the cannabis industry, which already show potential to significantly contribute to national and local revenues.

In the United States, for example, the cannabis industry already operates with specific tax systems, including ad valorem taxes, general sales tax rates, and, in some states, taxes based on THC content. Part of this revenue is allocated to social programs, such as community colleges, infrastructure, road maintenance, public health, substance abuse prevention, and economic development projects in communities historically affected by the war on drugs.

According to the Tax Foundation (2023), the revenue potential of the sector is significant. In 2022 alone, U.S. states collected nearly US$ 3 billion in cannabis taxes — even considering the need to maintain competitive rates against the illegal market.

Current regime does not consider cannabis specificities

In Colombia, taxation currently applies to the sale of goods and services related to business operations in the sector, mainly through income tax, property tax, and, at the municipal level, the tax on industrial and commercial activities (ICA). Primary agricultural activities, for example, are exempt from ICA.

However, these taxes are general and applicable to all legal entities — they are not exclusive taxes of the cannabis industry. It is worth noting that this is a sector that has also been committed to promoting responsible consumption and protecting public health. Therefore, as in other regions, it could be subject to a special tax regime that would also result in a positive social return.

Path to a modern and sustainable fiscal policy

Including cannabis in the tax reform debate is far from an unreasonable proposal. On the contrary, expanding the tax base, with the inclusion of emerging sectors, can strengthen public finances, promote transparency and traceability, and positively impact the revenues of municipalities and departments — without harming the weakest links in the production chain, aligning with the current National Drug Policy.

Italian economist Mariana Mazzucato, an advisor to the Petro government, advocates for the role of the State as an entrepreneurial agent — going beyond its regulatory function to become a creator and shaper of markets. This perspective also implies an active role in inducing desirable economic behaviors, through industrial policies aimed at generating public value. Such an approach is perfectly applicable to the cannabis sector.

Therefore, more than a fiscal issue, it is a strategic opportunity. The cannabis industry has much to say — and to contribute — in the discussions that will shape Colombia's economic future.