Taxation of medical cannabis – incomplete info

How do the 20+ states without legal commercial recreational cannabis tax medical cannabis?

There are 29 or more states that have legalized medical cannabis, but no good list of how the ones that have not legalized commercial recreational cannabis tax medical.

I myself have tried to assemble info on taxation of medical cannabis only in the eight states that have legalized commercial recreational cannabis, at https://newrevenue.org/2017/10/16/state-marijuana-taxes-today/ (chart from that site at end of this post). That’s more work than I’m willing to do (can the Center for New Revenue get a volunteer intern?), and the sources I’ve found don’t seem reliable. Any information will be appreciated.   Continue reading “Taxation of medical cannabis – incomplete info”

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Gresham’s law for revenue estimates

“Gresham’s law is a monetary principle stating that ‘bad money drives out good.’ For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will disappear from circulation.” That’s from wikipedia.

The same phenomenon applies to official revenue estimates, it seems to me.

Say an industry has a friendly Member lined up to do its bidding. The ideal tactic for the industry might be to have the Member propose a number of different tax cuts, and get the official scorekeeper to produce revenue estimates for all of them. Then the industry can see which tax cut proposals get lower revenue cost estimates than they believe. Say the industry figures, based on confidential information that the scorekeeper can’t readily discover, that proposal A would benefit the industry by $3 billion, proposal B would benefit it by $6 billion, and proposal C would benefit it by $9 billion. Say the scorekeeper comes back with estimates (to make this very simple) that they all cost $6 billion. So the Member abandons A and B, and gets C enacted.  The bad estimate has driven out the good. Continue reading “Gresham’s law for revenue estimates”

Marijuana tax competition — in Thehill.com

Revenue from marijuana?
Not so fast.
Local retail taxes will weaken.
Local producer taxes will vanish.
State taxes will fail when federal legalization stops anti-import rules.  http://thehill.com/opinion/finance/372396-how-tax-competition-can-threaten-marijuana-revenue  Continue reading “Marijuana tax competition — in Thehill.com”

280E revenue won’t keep marijuana illegal

[See UPDATE from 2 Feb 2018 at the end.]
Amanda Chicago Lewis has a thought-provoking article in Rolling Stone that points out the federal government is making money from federally illegal marijuana. I appreciate her allowing me to take issue with her thought — “the feds might be making way more money by keeping weed illegal than they would by legalizing” — by letting me say, “’The federal government is not going to do this for zero,’ Oglesby says.” Continue reading “280E revenue won’t keep marijuana illegal”

Nixon favored work; Trump disfavors it.

My friend and Chaired Professor Emeritus at UNC Law School Bill Turnier, who taught me tax in the 1970s, authorized me to post this: “The following thought occurred to me about the difference in the taxation of earned income under Nixon and Trump, or more appropriately their administrations. Under the current rate structure it seems that the most disadvantaged income class is that of income derived from personal services. It and some other ordinary income is taxed at the maximum rate of 37%. The 1969 Act introduced a maximum tax rate of 50% on earned income leaving other ordinary income to be taxed at 70%. It is just another marker of how much more the modern GOP represents capital over labor.”

Amen.

GOP Tax Cut Bill: Bad News and Good

A friend asked why this website has been ignoring the GOP Tax Cut Bill. Confession: I’ve been tweeting more than blogging — https://twitter.com/ search for @Oglesby Pat, mostly making three non-mainstream points, reproduced below: The Repatriation Tax Amnesty (“Holiday”) would prove an easy source of gimmicky revenue, the 280E marijuana tax would not be repealed, and the alcohol tax cut is shameful. Yes, I’ve fallen prey to “short-term, dopamine-driven feedback loops” of social media – and to laziness.

OK, here goes for the Tax Cut Bill overall, with bad news and good.

Bad news: The GOP tax bill is the worst tax bill I’ve encountered. We will borrow more money we won’t pay back (in sound dollars). Tilting to the rich, the bill will make the poor poorer.

Good news:  This tax cut bill won’t stand the test of time.   Continue reading “GOP Tax Cut Bill: Bad News and Good”

Turning (Taxed) A into (Untaxed) B

When I worked on the staff of the Joint Committee on Taxation in the 1980s, a friend who came to the staff from private law practice described the private tax lawyer’s mission in a way I haven’t forgotten: Turning A into B. That is, taking things that should be taxed at a high rate because they belong in one category, and figuring out how to put them into another category – low taxed. Lawyers rather than accountants have the word-training to take on this kind of mission.  She also called the mission “Turning This into That.”

(I’ve been looking recently at marijuana taxation, where the stakes are so low that lawyers can’t be bothered. In Oregon, Colorado, and several newly-legalizing states, users turn taxed recreational cannabis (Category A) into untaxed or lightly taxed medical cannabis (Category B) with little oversight or pushback).

The so-called Tax Reform bills working their way through Congress offer huge opportunities for turning A into B. Tax lawyers will make bundles of money.

Here are a couple of opportunities: Continue reading “Turning (Taxed) A into (Untaxed) B”