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 § Leave a 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 § Leave a 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 »

Marijuana taxes on Oregon ballots: 110 wins, 0 losses

November 15, 2016 § Leave a comment

Recreational marijuana taxes were on the ballot in 110 Oregon localities on November 8. Every single tax measure won voter approval (http://gov.oregonlive.com/election/2016/general/marijuana-results/). « Read the rest of this entry »

Pushback on 280E

November 12, 2016 § Leave a comment

A friend who is a tax policy expert writes, after I sent him my 280E article, https://www.brookings.edu/blog/fixgov/2015/12/18/how-bob-dole-got-america-addicted-to-marijuana-taxes/:

“Thanks for your article;  it’s really interesting and thought-provoking.  You make a better case for 280E than « Read the rest of this entry »

$50 million “blunder” in Prop 64?

November 12, 2016 § Leave a comment

California Board of Equalization elected Member Jerome Horton, an opponent of Proposition 64, came up with an October surprise to illustrate a weakness in the proposal. That weakness didn’t prevent its passage, but it lingers.

Member Horton alleged that a tiny, technical, last-minute drafting change in the California 2016 marijuana initiative could cost the state $50 million, starting in November. Indeed, the Board of Equalization has adopted his view and officially confirmed that the current sales tax on medical marijuana just disappears – for a while.

I don’t know how anyone would have standing to sue to reverse that ruling. So, apparently, unless the Legislature acts, the total tax on medical cannabis, over time, will be:

— 7.5%, (through the November 8 Election) then
— 0% (from certification of ballot results through 12-31-17), then
— 15% plus weight tax (starting 1-1-18).

That makes no sense to me. It’s a roller coaster ride, with no discernable rationale.  A “blunder.” « Read the rest of this entry »

Groundswell for local marijuana taxes in California

November 10, 2016 § Leave a comment

Drug Policy Forum of California provides these results of local California ballot measures, where it looks like every stand-alone marijuana tax increase passed.  CORRECTION:   The town of Colfax voted 63% for a tax measure that required a 2/3 majority.  That’s the only loser.  http://www.drugsense.org/dpfca/votersguide1116.html#LOCALS

Beyond percentage of price, tax bases include:
Canopy, with different rates for indoor, outdoor, and sometimes mixed light.
Weight, with different rates for bud and trim.

Some remembered indexing. One phases out canopy taxes when the State sets up a weighing program.

++++

Here’s the story, quoted from the Drug Policy Forum of California:

LOCAL BALLOT MEASURES

AdelantoMeasure R would impose an excise tax of up to 5% on all types of commercial marijuana activities. PASSED 67-33% « Read the rest of this entry »