Marijuana tax: The tricky line between flowers and leaves

A tax is imposed upon the privilege of engaging in business as a marijuana producer at the rate of:

(a) $35 per ounce on all marijuana flowers;

(b) $10 per ounce on all marijuana leaves; and

(c) $5 per immature marijuana plant.

That’s the tax piece in a marijuana legalization proposal in Oregon.  (Rates are indexed – the drafters are on the ball.)  The problem is drawing the line between flowers and leaves that come from one plant.  That’s not an exact science.  Disputes, fussing, and mistrust may result.  Or maybe the line is clear enough that it’s “close enough for government work.”

I’m trying to suggest something better.  I’ll post again  if I can.  [UPDATE:  Look on this web site for terms like “bud-trim line.”]  But drawing lines between flowers and leaves seems more doable than figuring transfer prices  between two parts of one entity.  

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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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