Marijuana Legalization and Tax: I Was Wrong

For a couple of years, I labored (literally) under the impression that proposals to legalize marijuana might need high revenue to pass.[1]  I got that impression from the repeal of alcohol Prohibition, where “revenue considerations, when joined to the desire to eradicate the evils that grew out of prohibition, . . . gave the repeal movement its powerful motive force, leading finally, on December 5, 1933, to the abandonment of the dry law.”[2]

Well, in November balloting on marijuana legalization, voters in Washington faced a relatively strong tax scheme; voters in Colorado, a relatively weak one.[3]  Both proposals passed with strong majorities; the majority in Washington, 55.44 percent,[4] was only marginally higher than that in Colorado, 54.83 percent.[5]  In press coverage, the level of taxation was pretty much a nonissue.

Meanwhile, in Oregon, a legalization proposal with a nonsensical revenue plan (putting a state monopoly in the hands of marijuana producers) got some 44 percent approval.

Issues other than taxes drove those results.  So the tax card is no ace in the hole.  I was wrong.

More to come . . .


[1] “Laws To Tax Marijuana,” 59 State Tax Notes 251-280 (January 24, 2011), online at http://ssrn.com/abstract=1741735 and https://newtax.files.wordpress.com/2011/01/20-may-2011-taxing-marijuana4.pdf.

[2] Tun Yuan Hu, The Liquor Tax in the United States, 1791-1947: A History of the Internal Revenue Taxes Imposed on Distilled Spirits by the Federal Government 63 (New York: Columbia University, Graduate School of Business 1950).

[3] “Gangs, Ganjapreneurs, or Government: Marijuana Revenue up for Grabs,” 66 State Tax Notes 255-269 (October 22, 2012), online at http://ssrn.com/abstract=2165864 and https://newtax.files.wordpress.com/2012/10/gangs-ganjapreneurs-or-government-marijuana-revenue-up-for-grabs.pdf

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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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