Forced conversion of marijuana businesses to non-profit? I doubt it.

I’ve learned a lot from my friend Jon Caulkins (we were among eight co-authors on the RAND report for Vermont, and he’s helped and encouraged me over the years). Jon worries about for-profit marijuana businesses, and prefers non-profit businesses. Fair enough, but let’s think about practicalities. In an article in the National Review, “Against a Weed Industry,” Jon suggests, for the eight states where recreational cannabis is legal, “The Justice Department can simply send a letter warning that if the company does not shut down within a reasonable time, its owners will be arrested and its assets seized. . . . The Trump administration could phase out those for-profit businesses in favor of nonprofit organizations by issuing a new memo. . . . Shutting down state-licensed businesses could feed the black market, but not if nonprofit organizations are allowed to take their place.”

But I can’t see that happening. It would be very hard, politically and practically, to replace for-profit cannabis sellers “in favor of” non-profit sellers. Getting from here to there is not easy. Continue reading “Forced conversion of marijuana businesses to non-profit? I doubt it.”

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New York State’s $100 Million Opioid . . . Tax

OK, they call it a fee, but it looks like a tax to me.  New York is collecting $100 million from opioid sellers -- with a few exemptions, like for Hospice use.

Here's the law:  http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=S07507&term=2017&Summary=Y&Actions=Y&Text=Y, mentioned to me by Katherine "KT" Kramer of ASTHO.
 Continue reading "New York State’s $100 Million Opioid . . . Tax"

Taxing opioids

My new article in The Hill has this:  “Make expenses of selling opioids non-deductible on income tax returns. That is, sellers could not deduct the costs of those gifts, junkets, dinners, and salespeople’s salaries on their income tax returns. Making drug companies’ marketing efforts non-tax-deductible is a move, even if a small one, in the right direction. And legitimate users shouldn’t bear any of the tax burden. What’s not to like?”  The federal government can do this, and each state can, too, for its state income tax returns.

http://thehill.com/opinion/healthcare/382984-instead-of-taxing-opioids-we-can-it-put-the-tax-burden-directly-on-opioid

Center for New Revenue disbands; founder to invest in hemp farming

Pat Oglesby, founder and director of the North Carolina-based Center for New Revenue, announced plans to disband the non-profit, which has focused on revenue from cannabis, and to invest in hemp farming.

“It’s federally legal,” said Oglesby, “and there’s a lot of money to be made — without tax shenanigans.  I have lots of friends in the cannabis community. Most of them are in the recreational space, but some of them know plenty about hemp, and they are helping me navigate this transition.”

“Maybe someone else will take up the causes of thoughtful marijuana taxation, of government cannabis sales, and of reform rather than repeal of Tax Code section 280E,” he said. “It’s been a good run, but at age 70, I’ve had my say.” Continue reading “Center for New Revenue disbands; founder to invest in hemp farming”

6 of 8 legalizing states allow local cannabis excise taxes

Here is a quick look at local cannabis taxes in the eight states with legal recreational cannabis commerce.

A starting point is a State of Connecticut document that’s close to right:  https://www.cga.ct.gov/2018/rpt/pdf/2018-R-0034.pdf

“Additional local taxes apply in all of the states except Maine. Local marijuana excise taxes may apply in municipalities in Alaska, Colorado, Massachusetts, and Oregon. Additional local sales taxes may apply in Alaska, California, Colorado, Nevada, and Washington in jurisdictions imposing such taxes.”

They missed local excises in California and Nevada, but I agree that Washington and Maine don’t have local excises. (Local sales taxes aren’t worth looking at.)

California is the state where local taxes are the biggest issue. Local taxes routinely pass when voters are asked about them. https://newrevenue.org/2016/11/10/5026/. Continue reading “6 of 8 legalizing states allow local cannabis excise taxes”

Nonprofit status for marijuana groups

UPDATE, 30 March 2018:

On Twitter, Phil Hackney (@EOTaxProf ) has this and more:
“To be clear this is only a procedural document. It says the IRS will not issue a ruling on orgs claiming exempt status in as an org advancing a line of business if that business involves marijuana. Not the same as saying such orgs do not qualify; no need for such orgs to apply.”  https://twitter.com/EOTaxProf/status/979475478452035584

I agree that the IRS “no letter” rule for marijuana non-profits is of minor direct legal consequence. But people in cannabis community might understandably see this as
(1) deliberately singling them out;
(2) evidence of Administration antipathy – evidence of more to come.

ORIGINAL POST:

A recent IRS ruling, sent to me by Professor Francine Lipman of UNLV Law School, is making waves:  The IRS says it “will not issue a determination letter [about non-profit status] when the request concerns an organization whose purpose is directed to the improvement of business conditions of one or more lines of business relating to an activity involving controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law regardless of its legality under the law of the state in which such activity is conducted.”

“Improvement of business conditions” I don’t quite get. I’m confused. This is not my field. Off the top of my head:

I’m thinking of a distinction between trying to help people break a law and trying to change a law. Continue reading “Nonprofit status for marijuana groups”