This blog is very skeptical of the ability to measure THC accurately enough to tax it. Here is an argument that testing is accurate enough: “Skeptics say it is too difficult to measure THC, but that’s not very convincing when High Times magazine offers the same kind of product specs you’d find in an issue of Stereophile or Car and Driver Magazine.”
But even claims of horsepower have been found inaccurate. And nobody taxes horsepower. The sampling of bud leaves the door open to manipulation and abuse – by taxpayers or government.
Accuracy for taxation is not the same as accuracy for journalism — or advertising. And if the incentive shifts to make low THC claims profitable, I would not count on taking those low claims to the bank, either. That’s where I look to a stated THC tax as an option, as suggested by Beau Kilmer and David Ball, described here at page 541 note 17. Remember what happened to statements of tar and nicotine content on cigarette packs: they are not there any more.
Lots to argue with in a Forbes article here that attacks marijuana taxation:
1. “It’s a basic principle of sound tax policy that the code should not pick winners and losers or disproportionately target certain industries or groups of taxpayers.” There’s a grain of truth there, but pushed to this extreme, it leads to taxing whiskey like wheat, and marijuana like milk.
2. “Because marijuana can be purchased as a cigarette, an edible, a liquid, or vapor, all with a wide variety of concentrations, a specific excise tax is untenable.” That’s a complete red herring. No one else suggests taxing weight or potency at the product level. That would be like taxing rum punch like vodka shots. Just as you tax the rum in rum punch, not the punch product, you would tax the marijuana that goes into edibles and so on, not the final product.
3. “There is no reason why the tax code should deny ordinary and necessary business expenses to legitimate businesses established under state law.” Well, you might think advertising and marketing of marijuana might be (a) unwelcome on policy grounds and (b) protected under some reading of free speech. Denying deductions for those expenses might be the best you can do. More here.
Ed Kleinbard’s book starts with a free-market slant (much of the following is paraphrased):
Private enterprise ≈ path to greater national wealth and is conducive to the preservation of personal liberties.
And doesn’t oppose regressive taxes:
Surprisingly, the progressivity of tax rates is negatively correlated with the reduction in inequality a country achieves.
But moves on to blast anti-tax hysteria: Continue reading We Are Better Than This — Kleinbard