April 19, 2014 § Leave a comment
Some of the opponents of marijuana legalization, I call them the Just Say Never crowd, remind me of Graham Martin, the U.S. Ambassador to South Vietnam at the time of the fall of Saigon. Martin appears in “Last Days in Vietnam,” http://www.lastdaysinvietnam.com/, a documentary by Rory Kennedy. He refused to contemplate the possibility that Saigon would fall. He rejected any and all attempts to plan for defeat. So, instead of huge aircraft or naval vessels being brought near the capital and the Embassy to do the evacuating, we saw the spectacle of desperate folks clinging to helicopters. The Ambassador reminds me of the Just Say Never crowd — they would be better off dealing with reality. Instead of abandoning the debate of How to legalize to the fans of marijuana, they might adopt the tactic of trying to figure out a middle ground (limiting advertising, keeping prices from collapsing, whatever they might think makes sense).
But by refusing to face the prospect that their position will turn out to be untenable, the Just Say Never crowd may be turning a manageable situation into a rout.
April 18, 2014 § Leave a comment
April 17, 2014 § Leave a comment
Drug policy expert Mark Kleiman says:
“Producing [a year’s supply of] cannabis and distributing on the legal market might cost you $5 billion — but only if you did it clumsily.
. . .
“I don’t know what it would cost to run those dozen farms [needed to produce a year’s supply] but not a lot of money. Then you’d have to cure it and process it and test it and package it and label and distribute it and market it. Still, a couple billion dollars. The rest of the $40 billion plus whatever the spending is by the new users is available as tax.”
So $35 billion ($40 billion less $5 billion) looks like the low end of the range, with because it reflects costs higher than are realistic, and no new use. But it requires political will, national uniformity, wholesale conversion of the medical marijuana market to taxed recreational use, as Ethan Nadelmann predicts, and determined effort to beat the black market.
April 13, 2014 § 1 Comment
Click for PDF: Oglesby, Pat, Ace in the Game – Revenue from Legalized Marijuna, April 16, 2014 (earlier version pasted below and at Oglesby, Pat, Ace in the Game – Revenue from Legalized Marijuna, April 14, 2014). This paper is on the “Programme” for the International Society for the Study of Drug Policy meeting in Rome in May, http://www.issdp.org.
The formatting in the PDF above is better than this:
The Ace in the Game: Revenue from Legalized Marijuana By Pat Oglesby, M.B.A., J.D.* April 14, 2014
After marijuana is legalized, the costs of producing and selling it will collapse. A windfall economic gain will be up for grabs. Policymakers might allow that gain to go to consumers (encouraging use) or to cannabusinesses (encouraging production). Or, through revenue measures, they might direct the gain elsewhere, or to society as a whole. New revenue for government does not justify legalization of marijuana. New revenue may not cover the costs that legalization creates, and a revenue stream gives government a permanent stake in intoxication. Revenue is only one card in a large deck of drug policy options. But it is the most powerful card.
How to play it? The safest, correctable way to distribute an intoxicant is government monopoly, Uruguay style. Retail-only monopoly can match or beat bootleggers’ wares. But monopoly breeds cronyism and corruption, unless power is spread around and transparent. In the United States, states might need to tweak the monopoly model to keep state control over location and price while assigning sales concessions to businesses.
A riskier plan is taxed commercial distribution, Colorado and Washington style. In the inevitable price war, bootleggers will act in a New York minute; Legislatures will not. That is a handicap. And no tax is perfect. Taxing by THC potency is theoretically appealing, but unworkable. A price tax base has several pitfalls. Even a weight base is problematic.
Three other models are possible: auctioning licenses, collective farming, and sales by non- profits.
Since no one really knows how to legalize, flexibility to change course is of the utmost importance. « Read the rest of this entry »
April 10, 2014 § Leave a comment
Tom Chorneau of Cabinet Report, an education journal, has a thoughtful article hitting the main issues here. Excerpts:
(Colo.) In a development that might have seemed unthinkable only a few years ago, cash-strapped school officials nationwide can rightly anticipate the next big windfall in state and local tax revenue – legalized marijuana.
. . .
“One approach is for schools to jump in and say, ‘Yes, let’s tax it and get the revenues,” explained Pat Oglesby, an attorney and former Congressional tax staffer, who has written extensively on the issue of marijuana and taxation.
“Another approach is to say, ‘Let’s tax it and deter or discourage use,’” he said. « Read the rest of this entry »
April 9, 2014 § Leave a comment
Here’s how Colorado’s 15-percent wholesale level marijuana tax is actually a tax of 62 cents a gram for flowers and 10 cents a gram for trim. « Read the rest of this entry »
April 9, 2014 § Leave a comment
[Update: Law Professor Alex Kreit comments and analyzes here.] In Colorado, recreational marijuana is making the news, but medical marijuana is dominating the market. The state officially reports that in February, medical marijuana outsold newly legal recreational marijuana better than two to one. And medical sales are growing more than twice as fast.
Taxes may explain the popularity of medical marijuana. Medical marijuana bears only a 2.9 percent sales tax. Recreational marijuana bears, along with that 2.9 percent sales tax, another 10-percent retail tax. In addition, when a hole in Colorado’s wholesale tax disappears, all recreational marijuana will bear a stated 15-percent wholesale tax, now amounting to 62 cents per gram of flowers and 10 cents per gram of trim.
The total Colorado burden on recreational, even fully phased in, will be less than Colorado and federal taxes on cigarettes, but that may be enough to steer folks to the medical marijuana market. It’s still too soon to know how marijuana revenue will play out. But we are getting some early indications.
Here are the numbers: « Read the rest of this entry »