Beyond the Swiss Army Knife for medical marijuana

July 21, 2014 § Leave a comment

Tax has been called the “Swiss Army Knife of public policy.”  In the two states where recreational marijuana is legal, medical marijuana patients don’t pay tax on what they buy.  That’s one way of providing relief to sick people.  Berkeley, California, is considering another way.  The New York Times reports:  “marijuana dispensaries will have to set aside 2 percent of their product — which must be of equivalent quality to the marijuana they’re selling at market prices — and give it free to city residents with incomes below $32,000.” « Read the rest of this entry »

Confusion over Colorado marijuana taxes

July 18, 2014 § Leave a comment

I can’t understand the figures for sales of recreational marijuana in Colorado in April, the fourth month below:  How could 10 percent of marijuana sales be greater than 2.9 percent of all sales?  I’ve asked the Department of Revenue for help in understanding what is going on.  All figures come from links on http://www.colorado.gov/cs/Satellite/Revenue-Main/XRM/1251633259746. « Read the rest of this entry »

Free Marijuana — Tax Free in Colorado?

July 18, 2014 § Leave a comment

A quick look at Craigslist for Denver,  http://denver.craigslist.org/search/sss?query=free+marijuana, searching for free marijuana, shows (along with free delivery and other non-tax-motivated offers) several deals where the purchaser who buys some non-marijuana item gets a certain amount marijuana free.  Does that avoid the 10 percent retail tax on marijuana?  I wouldn’t be surprised to see taxpayers take the position that no tax is owed.

 

Sales of non-marijuana items in Colorado recreational stores quadruple

July 18, 2014 § 1 Comment

In January, recreational marijuana stores in Colorado sold just north of $350,000 worth of stuff that did not bear the 10-percent marijuana tax.  The math is explained here.   By May, that figure had more than quadrupled, to over $1.4 million. « Read the rest of this entry »

Bundling to beat Colorado marijuana tax?

July 18, 2014 § Leave a comment

It looks to me like sales of non-marijuana items in recreational stores have risen from 2.5 percent in January to 6.5 percent in May.

Hmm.  Does that mean stores are “bundling” normally taxable marijuana with free-of-10%-tax vaporizers or something?  For instance, buy an untaxed vaporizer, get your marijuana free as part of the vaporizer price?  I have no idea, but there is an incentive to do that — if taxpayers think that works.  As an old friend from the Joint Committee staff used to put it, the job of the tax lawyer is to turn This into That.

Folks in Colorado know a lot more than I do.

Details here.

Calculating Colorado marijuana sales

July 18, 2014 § Leave a comment

My mistake:  I thought I could figure out the ratio of recreational marijuana sales to medical marijuana sales in Colorado (and gross sales) by comparing sales tax figures.  Both bear the same 2.9 percent sales tax, so I took sales taxes reported by recreational businesses and divided by .029 to get total recreational sales.  Then I did the same for medical marijuana businesses (which report separately in Colorado).

Not so fast!  Professional journalists got this right.  It turns out that those sales taxes cover not just marijuana, but everything sold in the stores – pipes, papers, T-shirts, trinkets, you name it.  (Thanks to Natriece Bryant of the Colorado Department of Revenue for confirming that treatment.)

It’s easy to calculate sales of recreational marijuana:  take the 10-percent retail tax reported by the State, and multiply it by 10 (divide it by .10).  (I thought my 2.9 percent method was close enough, and had the advantage of comparing recreational and medical marijuana sales directly.)

Getting it right alerted me to a phenomenon:  In January, only 2.5 percent of sales of recreational marijuana stores were accounted for by non-marijuana items (pipes and so on).   By May, that figure had risen to 6.5 percent.

Here are the figures: « Read the rest of this entry »

Quotas for intoxicant businesses in 1933

July 14, 2014 § Leave a comment

When Prohibition was repealed, the federal government was deluged with applications to import liquor.  Granting quotas to all applicants seemed likely to create a situation where “nobody would have got enough to do business with.”

There are various ways of dealing with excess applicants, like holding a lottery, as Washington state is doing; selling licenses to the high bidder; or, as the Roosevelt Administration did in 1933, considering each application on its merits and deciding yes or no for each application.  Here are details, with highlights bolded, stated by the head of of the Federal Alcohol Control Administration: « Read the rest of this entry »

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