Beyond Bud-Trim

October 12, 2015 § Leave a comment

Colorado now has seven categories of marijuana to weigh in its de facto weight-based marijuana tax. Wet bud and wet trim are to have different tax rates per gram than dry bud and dry trim. And there are completely new categories of wet and dry “whole plant”

Here’s the language:

(22)  “Wet” refers to Retail Marijuana that is not dried or cured. This term includes Whole Plants, Bud and Trim. With respect to any Wet Retail Marijuana, whether or not the marijuana is sold or Transferred before or after being trimmed, the plant material to be sold or Transferred must be weighed within 6 hours of the plant being harvested, and tax must be paid on that weight.

(23)  “Whole Plant” means a Retail Marijuana plant that is cut off just above the roots and not trimmed. The weight of the whole plant includes all bud, leaves, stems, and stalk. The Department treats 55% of the weight of a Whole Pant as Bud, 30% of the weight of the Whole Plant as Trim, and 15% of the weight of the Whole Plant as waste. These percentages are calculated into the Average Market Rate. The percentage treated as waste is not subject to the Retail Marijuana Excise Tax. « Read the rest of this entry »

Humboldt’s Principled Cannabis Tax

October 7, 2015 § Leave a comment

A new cannabis canopy tax is on the table in Humboldt County, California.  It follows two key principles of tax policy: Tax things you can measure, and collect early.

I.  Tax things you can measure

The square footage of area under cannabis cultivation is something you can actually measure. (I’ll use “canopy” here is a shorthand approximation of cultivation area.)  Some canopy, you can measure from the air. And some you can even find on Google maps.

Four of the first marijuana taxes in history, the 2010 wave of taxes in Albany, Berkeley, Long Beach, and Rancho Cordova, California, were based square feet of operations. Having the government measure the area being farmed is nothing new. For years, starting in the 1930s, U.S. tobacco farmers were allowed to grow on only a specified land area.

Sure, canopy is a crude way to tax cannabis. Taxing THC might be just right, in theory, as the RAND Vermont report points out. But we can’t measure THC reliably even for concentrates yet. And trying to tax bud (flowers) by THC is futile – like taxing tobacco by tar and nicotine content, which no one does. Yes, canopy doesn’t correlate well with THC, but you can measure it. And a canopy tax, in the long run, will probably be just one of several taxes on cannabis.

OK, indoor grows can’t be easily detected from the air, so the most environmentally unfriendly operations may have the easiest time evading tax. But we can figure out who is using electricity, and there are other ways to detect indoor growing. « Read the rest of this entry »

We can’t tax the rich

October 7, 2015 § Leave a comment

Republicans are thought of as the party of the rich. Now Thomas Edsall writes in the NYT: “the share of contributions to Democrats from the top 0.01 percent of adults . . . has grown from about 7 percent of total campaign contributions in 1980 to more than 25 percent of contributions in 2012.”

Since even Democrats get so much money from rich people, it’s not surprising that we don’t tax the rich more.

We could start by reinforcing the now-puny estate tax.  The arguments that death taxes inhibit enterprise are pretty far-fetched.

Speaking at Meredith College

October 5, 2015 § Leave a comment

meredith october 2015

In Raleigh.  They spelled medical wrong, but still.

Tribes pay no tax

October 3, 2015 § Leave a comment

Forbes tax columnist Robert Wood points out that Indian tribes won’t pay federal income tax from profits on marijuana income. And they won’t incur the 280E penalty.

A Joint Tax Committee document says the Service could change this result itself – as a technical matter, leaving aside politics:

No specific Code provision governs the U.S. income tax liability of Indian tribes. However, the Internal Revenue Service (“IRS”) has long taken the position that Indian tribes and wholly owned tribal corporations chartered under Federal law or the Oklahoma Indian Welfare Act are not taxable entities for U.S. income tax purposes and are immune from U.S. income taxes, regardless of whether the activities that produced the income are commercial or noncommercial in nature or are conducted on or off the tribe’s reservation.


Wouldn’t a change be the right answer? Wood’s article concludes: “As with many other tax rules, these rules are becoming more controversial. Expect renewed discussion of these rules and their limits in the future.”

Cannabis Canopy Taxes – Smooth or Spiky?

October 2, 2015 § 1 Comment

Say you wanted to tax marijuana, and you wanted to big business more than small business. Say the tax base you chose was canopy of grow area. There are two good reasons to tax canopy – first, it’s easy to measure (not manipulable); second, you collect up front (no leakage).

You could make your taxes spiky or smooth.

Here’s how to make them spiky:

The tax rate is $1 a square foot if your farm is 5,000 square feet or smaller, and $2 a square foot if the farm is bigger than 5,000 square feet.

Then, if you have 5,000 square feet under cultivation, your tax is $5,000. If you have 5,001 square feet, your tax is $10,002. That’s a marginal rate of $5,002 per square foot for that one extra square foot. That’s a discontinuity (or a “cliff”), and it looks awkward.

Here’s how to make them smooth: « Read the rest of this entry »

Two wrongs for the right

October 1, 2015 § Leave a comment

Conservatives of various kinds do not like either marijuana or socialism, but they face the conundrum that if legalization is coming, the social model of government ownership is the safest model.  Two wrongs make a right?

John D. Rockefeller, Jr., quoted in the HuffPo piece below, was a conservative economically and socially.  And a teetotaler.  But he studied alcohol Prohibition hard, and came to understand that state alcohol stores were the safest outlet.  Today’s “conservative” opponents of cannabis legalization are unwilling to see the writing on the wall — that legalization is coming.  They’re dead-enders, gambling everything on pushing back the tide.  They Just Say No.  So they’ll get TV ads and flashing neon, and powerful private interests relentlessly pushing legislatures for “Liberalization” — like Big Tobacco and Big Alcohol.

It’s too late for state stores in some states. But not all.  And other countries have a free hand.  Meanwhile, some folks would legalize all drugs.  With for-profit stores selling heroin and methamphetamine?

« Read the rest of this entry »


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