Marijuana tax base: Grams?

As a base for a marijuana tax, percentage of price has an apparent advantage of seeming reasonable on its face in some cases — that’s what I heard a lot at the Drug Policy Alliance conference in Denver.  That is, an objection to a weight base (in addition to “it encourages high potency”) is that a series of three 25-percent excise taxes like those in Washington state’s law may seem reasonable, and a tax of say $50 an ounce might seem so outrageously high as to be unenforceable.  We don’t tax anything at $50 an ounce. Continue reading “Marijuana tax base: Grams?”


Panel on Marijuana Regulation in Denver

BXXL8ibCYAA6LWq - Version 2Left to right:  Jorge Hernandez Tinajero, President, Collective for an Integral Drug Policy, Mexico City, Mexico; Steve Rolles, Senior Policy Analyst, Transform, Bristol, England;  Beau Kilmer, Co-Director of RAND Drug Policy Research Center, Santa Monica, CA; me; Congressman Julio Bango, Represente National at Parlamento Uruguayo, Montevideo, Uruguay; Sam Kamin, Director, Constitutional Rights & Remedies Program and Professor, Sturm College of Law, University of Denver, Denver, CO;  Dick Reinking, Senior Policy Advisor, Gemeente Utrecht, The Netherlands.  Not pictured:  Moderator Graham Boyd, Counsel to Peter Lewis, Santa Cruz, CA.

This session took place Thursday, October 24, in Denver, at the biennial conference of the Drug Policy Alliance.  I indicated that I thought taxes in CO and WA were maybe unavoidably wrong by having static rates, probably wrong by using a percentage of price base, and nearly certainly wrong to the extent they collected tax later than the choke point (punto de embudo — we had simultaneous interpretation).  I learned a lot from the rest of the panel — different from my days with Congress, when most panels consisted of all tax lawyers, and the occasional relief came from a tax accountant or tax economist.

Another tax policy expert on marijuana

It turns out that my friend and former teacher  Bill Turnier of UNC-CH Law School (whose Family Wealth Management course I helped him teach) looked at marijuana and taxes a while back.  He wrote “The Pink Panther Meets the Grim Reaper: The Estate Taxation of the Fruits of Crime,” in 72 N.C.L. Rev. 163.  The article deals with the valuation of contraband.

Every day I learn something new.  Or remember something I used to know.

“Hoping . . . tax policy experts will engage on marijuana”

That’s the message of Professor Douglas A. Berman of Ohio State Law School, who is teaching a seminar and hosting a blog on marijuana law.  Yes.  Please.  Joel Newman of Wake Forest (280E), Ed Roche of Denver (280E), and Ben Leff of American (501(c)(4)) are the only Law School professors who’ve written anything I’ve found.  There is a lot of thinking that needs to be done.

UPDATE:  Taxprof is on it, too, along with State Tax Notes.

Taxing Marijuana: Dabs and Edibles

Price, weight, potency:  Those are the leading options for a tax base for marijuana.

Potency won’t work for taxing plant material (smokable marijuana), because it’s not fungible (homogeneous) enough to yield replicable test results.  Accuracy within 10 or 20 percent is not “close enough for government work.”  If my W-2 or 1099 IRS form is 20 percent too low, I’ll be smiling;  if it’s 20 percent too high, I’ll be trying to figure out how to appeal — or how to find a different measurer (the analog of testing lab) next time.

But “concentrated cannabis oils, known in various states as ‘butter’, ‘shatter’, ‘wax’, and ‘BHO’” – are fungible enough to yield replicable THC results – close enough for government work, indeed.

But then it turns out that concentrates have two uses:  for smoking and for edibles.  Smoking concentrates may be the most intoxicating form of consumption.  But when concentrates are incorporated into edibles, they lose potency.

There’s a dilemma.  If intoxication is the basis Continue reading “Taxing Marijuana: Dabs and Edibles”