OR taxes too high?

[Oregon] State Rep. Carl Wilson . . .and other lawmakers struggle to figure out how to tax pot without driving sales underground. . . .

“It is becoming clear that the 800-pound gorilla here is taxation,” Wilson said. “Many members of the committee are deeply concerned with marijuana products being taxed out of the market, making everything we have done useless.

“As I’ve heard from Colorado, you don’t want to get into the position that the only people who buy legal marijuana at the retail level are ‘chumps and tourists.'”

That’s from the Medford, Oregon, Mail Tribune, http://www.mailtribune.com/article/20150330/NEWS/150339960/101033/NEWS

That “chumps and tourist” line comes from:

“I had a store owner in Colorado tell me that only chumps and tourists go to the [taxed] recreational side” of marijuana businesses rather than the tax-free medical side, Seattle City Attorney Pete Holmes saidhttp://www.usatoday.com/story/news/nation/2014/09/26/washington-marijuana-legal-scarce/16266573/

Taxes probably need to be low at first, maybe ultra-low, as the legal market takes hold.  Options for a dynmaic market are listed in the RAND Report, http://www.rand.org/pubs/research_reports/RR864.html, at pages 88-93.

The choice may be between a tax holiday, with a zero rate to start out, and a nominal rate, which would let the administrative mechanism crank up.  Low taxes need not last forever.





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