280E and square feet — Arkley

April 15, 2015 § Leave a comment

Having doubted that square footage (or canopy) fees or taxes could be deductible under 280E on the federal income tax return of a cannabis-growing business, I asked Todd Arkley, a Washington State CPA with a lot of cannabis clients. Todd knows more than I hope ever to learn about tax accounting.  Whether you call a payment based on square footage a tax or a fee, he makes the case that it is deductible.   « Read the rest of this entry »

Arcata Electricity Tax — Guest Post

April 3, 2015 § Leave a comment

GUEST POST from a California observer of Arcata’s electricity tax. The writer, whom I thank, asked to remain anonymous. I don’t necessarily agree or disagree with opinions in the post, but find it thorough and thoughtful.  And whatever you think of an electricity tax, Arcata’s tax seems to have glitches.  Here is a better-formatted version:  Guest-post-from-a-california-observer-of-arcata_s-electricity-tax

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Guest: I’ve copied below a little essay I [the Guest Poster] wrote last year regarding what the nuts-and-bolts of this tax look like in terms of cultivation, and if it were applied to the rest of the county, what that looks like in terms of cultivation. « Read the rest of this entry »

Penalizing MJ electricity

April 2, 2015 § Leave a comment

Indoor marijuana grows are notorious consumers of electricity.  Following the lead of Arcata, California, Boulder County, Colorado, is taxing electricity use of marijuana grow operations:

“Boulder County will levy a charge of 2.16 cents per kWh on all electricity consumed by marijuana growers, which works out to about $100 extra for each kilogram of finished pot. « Read the rest of this entry »

OR taxes too high?

March 31, 2015 § Leave a comment

[Oregon] State Rep. Carl Wilson . . .and other lawmakers struggle to figure out how to tax pot without driving sales underground. . . .

“It is becoming clear that the 800-pound gorilla here is taxation,” Wilson said. “Many members of the committee are deeply concerned with marijuana products being taxed out of the market, making everything we have done useless.

“As I’ve heard from Colorado, you don’t want to get into the position that the only people who buy legal marijuana at the retail level are ‘chumps and tourists.'”

That’s from the Medford, Oregon, Mail Tribune, http://www.mailtribune.com/article/20150330/NEWS/150339960/101033/NEWS

That “chumps and tourist” line comes from:

“I had a store owner in Colorado tell me that only chumps and tourists go to the [taxed] recreational side” of marijuana businesses rather than the tax-free medical side, Seattle City Attorney Pete Holmes saidhttp://www.usatoday.com/story/news/nation/2014/09/26/washington-marijuana-legal-scarce/16266573/

Taxes probably need to be low at first, maybe ultra-low, as the legal market takes hold.  Options for a dynmaic market are listed in the RAND Report, http://www.rand.org/pubs/research_reports/RR864.html, at pages 88-93.

The choice may be between a tax holiday, with a zero rate to start out, and a nominal rate, which would let the administrative mechanism crank up.  Low taxes need not last forever.

 

 

« Read the rest of this entry »

California Thinking

March 30, 2015 § 2 Comments

I’m honored to be named co-chair of the Regulatory and Tax Structure Working Group of Lieutenant Governor Gavin Newsom’s Blue Ribbon Commission in California. « Read the rest of this entry »

1934 bootlegging

March 30, 2015 § Leave a comment

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Sure, a lot of marijuana commerce is taking place in the illegal sector right after legalization in Colorado and Washington, « Read the rest of this entry »

FDR and alcohol tax

March 23, 2015 § Leave a comment

Quotes from FDR team on re-imposing alcohol tax in late 1933, with the message of start with low taxes:

Topic (sentence fragment): “The assurance by tax adjustment and other means of an adequate supply of inexpensive legal alcoholic beverages which will be able to drive out the illegal competing production by price competition.”

Discussion: “The attempts to control this illegal industry solely by policing the production and sale of illegal alcoholic beverages have not been wholly satisfactory. The enforcement problems of the prohibition period will still remain in those States which continue to be dry after the repeal of the eighteenth amendment. It is believed that the price of legal liquor to the ultimate consumer in the post-prohibition period will be one of the important factors in determining the success or failure of the general effort to eliminate the illegal industry.” « Read the rest of this entry »

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