Hemp drugs: Hearing June 12, 2024, 2 EDT in North Carolina Senate Judiciary Committee
Mr. Chairman, Thank you.
My name is Pat Oglesby. I’m a lawyer with the Center for New Revenue in Chapel Hill. I was a staffer for the nonpartisan Joint Congressional Committee on Taxation, and I’ve been a paid advisor to several states on cannabis tax policy.
As you’re discovering, hemp-derived cannabinoids create both costs and externalities. That’s why North Carolina should tax these substances – ideally by THC content – as part of a comprehensive cannabis strategy.
Louisiana, Minnesota, Tennessee, and West Virginia are four states that already collect extra excise taxes on these substances. Those taxes range from 3 percent to 11 percent of retail price.
But that’s just one approach. An alternative and more effective tax is one being used in Connecticut, Illinois, and all Canadian provinces. They tax legalized cannabis products by the volume of THC they contain. This THC tax aims straight at the target you want to hit.
Whichever taxes you choose — taxes based on price or taxes based on THC levels — there’s a risk of overdoing it. If you tax too heavily, illicit sellers will bypass the tax and you won’t get the revenue you hope for. I don’t work for industry, but I do know that other states have learned this lesson the hard way: Overtaxing backfires.
The journey you’re on won’t be easy. But please know that I will do what I can to help. You can find me at http://www.newrevenue.org.
The Center for New Revenue 