Freezing marijuana tax rates until 2022, as the proposed “Control, Regulate, and Tax Marijuana Act” in California would do, strikes me as a risky gamble. Flexibility on taxes is needed. One expert puts it this way:
“There is stuff we’re going to get wrong – whether it’s tax rates, enforcement, the relationship [between recreational and] medical marijuana,” says law professor Sam Kamin at the University of Denver, who served on a task force that recommended regulations for Colorado’s marijuana industry. “The hope is that we have a system that is easy enough to change … and that people will have some patience and realize we’re the first jurisdiction in the world trying to do this.”
That impatient California proposal has a 25-percent tax rate (lower than the combined federal and state taxes on cigarettes). That tax has lots of technical problems, but what drives me away is a provision that the Legislature can’t raise the rate and, until 2022, can impose no new taxes (here’s some trivia: When you read lips, as George H.W. Bush suggested in 1988, “No new taxes” looks exactly like “No nude asses.” You can see this in a mirror.). When economies of scale kick in, that percentage-based tax will shrink to nearly nothing, and the only fix, under California law, is another Initiative. Oops.
The Center for New Revenue 