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 for taxing marijuana, concentrates should bear a higher tax if smoked, and a lower tax if cooked and eaten.
This dilemma reminds me of the way we tax virtually the same substance if used in vehicles (diesel fuel) and exempt it if used for heating buildings (heating oil). The exempt stuff is marked with a red dye. Can marking work for concentrates? Any consumable marker to would have to be nontoxic, hard to counterfeit, inexpensive to apply, and easy to detect in the field. This may not work.
And would different tax rates make home baking prohibitively expensive?
We are not even at the end of the beginning of figuring out what to do with legalized marijuana.
The Center for New Revenue 