Percentage retail marijuana tax fails

NYT:  “They charge $199 per person per night — you have to be over 21 — and offer two rooms, 24/7 car service and a hot tub. They can give, rather than sell, their homegrown pot to guests.”  On  November 24, 2013,  I predicted this bundling of service and marijuana where the marijuana was “free” – and free of the percentage based retail tax.  OK, I said $200 instead of $199.

This bundling with a hotel stay may be a non-problem.  Only if the hotel tax is less than 10 percent does the problem arise.  In that case, maybe a state tax auditor will find this transaction and try to figure out how much of that $199 was really for marijuana — and assign a (disputable) value to tax.

The real problem is that the industry will do more sophisticated bundling to beat the tax — selling expensive vapor pens (subject to only sales tax)  with “free” marijuana, say.  These are the early days of figuring out how to regulate and tax.

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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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