Unforced tax error in Colorado

January 21, 2017 § Leave a comment

The decision of the Colorado Legislature in 2015 to delay the effective date of the decrease in state’s marijuana retail tax from 10 percent to 8 percent was inexplicable. The industry needs low rates in the early days, not later.

So Gov. Hickenlooper’s call to let the effective date expire meaninglessly, and for an increase to 12 percent, is sensible, and not surprising.  Here’s that story: « Read the rest of this entry »

Fake History of 280E

January 19, 2017 § Leave a comment

I think this is Fake History: “The original sponsor of 280E, former Rep. Pete Stark (D-CA) . . . .” I see that statement that Mr. Stark sponsored 280E, for example, in Brett Stone’s newsgroup, https://groups.yahoo.com/neo/groups/mmjnews/conversations/topics/37712.

Mr. Stark now opposes 280E, which well he might, but that doesn’t make him the, or an, “original sponsor.” 280E originated in the Senate Finance Committee in 1982, when Bob Dole chaired it, as the legislative history, from the Joint Committee on Taxation Blue Book indicates: https://newtax.files.wordpress.com/2013/03/1982-blue-book.pdf.  See also https://www.brookings.edu/blog/fixgov/2015/12/18/how-bob-dole-got-america-addicted-to-marijuana-taxes/. « Read the rest of this entry »

Colorado marijuana tax rates hit all-time low

January 2, 2017 § Leave a comment

Colorado’s nominal tax rate of 15 percent now yields DE FACTO a historically low tax of 49 cents a gram on flowers or bud, and a steady rate of 17 cents a gram for trim or leaves.   « Read the rest of this entry »

Do you want your taxes smooth or spiky?

December 22, 2016 § Leave a comment

Cliffs, Discontinuities, Thresholds:

Don Marron illustrates that cliffs make  little sense for soda taxes here or at http://www.taxpolicycenter.org/taxvox/building-better-soda-tax.

Cliffs create problems for the income tax herehttp://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=9520&context=penn_law_review

For marijuana grows, cliffs’ problems are discussed here or at https://newrevenue.org/2015/10/07/humboldts-principled-cannabis-tax/ « Read the rest of this entry »

Transfer pricing explained

December 2, 2016 § Leave a comment

Transfer pricing explained, by the Nicholas Confessore of the New York Times:

What Oesterlund [a wealthy individual hiding assets during a divorce] had done is known as “transfer pricing,” a practice that has come under growing criticism in recent years. Multinational corporations use it to shift their costs to high-tax countries and their profits to low-tax countries. Often, there is little or no economic reality to these transactions. « Read the rest of this entry »

280E revenue cost

November 17, 2016 § 1 Comment

To get to the point, repeal of federal tax Code section 280E might cost some $1.3 billion in 2020 alone, and then rise steadily after that.

Right now, section 280E says sellers of federally illegal drugs can’t deduct advertising, marketing, or selling expenses. They can deduct only cost of goods sold. They deduct product cost – what they pay to grow marijuana, or to buy it from a grower or reseller.

Once marijuana is no longer a federally illegal drug, 280E ceases to apply, and its revenue disappears.

How much revenue would 280E’s disappearance lose?  That’s a tough question, and I don’t know.  According to some industry numbers, though, repeal could cost over $1 billion a year in federal tax revenue by 2020. « Read the rest of this entry »

Avoiding drafting blunders

November 16, 2016 § 1 Comment

The field of marijuana taxation turned into the field of cannabis revenue, and now it’s getting down to the level of Technical Corrections. Keith Humphreys explains a Prop 64 drafting blunder. (https://www.washingtonpost.com/news/wonk/wp/2016/11/16/the-marijuana-initiative-blunder-that-could-cost-california-millions/).

No one’s perfect. I do some proofreading and editing for hire,  « Read the rest of this entry »