Potency as a Base for a Tax on Marijuana — BOE

(For a more comprehensive discussion of this issue, go to http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1741735.)

Excerpt of email from California BOE spokesperson Anita Gore to the author, October 12, 2010 8:24:16 PM (before the outcome of Proposition 19 was knowable):

Staff has discussed the possibility of using potency as a component of an excise tax scheme.  Right now it is an option to consider, and when and if marijuana is legalized, and the legislature moves to impose an excise tax, a potency based tax would be a viable option if the legislature chooses to go in that direction.

With properly crafted legislation and sufficient resources staff believes it is doable.

Staff agrees there are issues around testing and certification like those you raise that would need to be addressed to support a potency based tax.  The question that goes with that is compliance.  Legalization itself will move distribution from an underground economy to a regulated industry.  Will the industry buy into that level of regulation?  No one knows.

Associated revenue – no way to know.

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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