Collection point loophole?

UPDATED May 24:  “Seth Crawford, a marijuana policy researcher at Oregon State University, estimates the state grows three to five times the 150,000 pounds or so consumed by Oregon pot users,” writes journalist Jeff Mapes.

So shifting from a tax on producers to a “point of sale tax” at retail, described at https://newrevenue.org/2015/05/20/oregon-shifts-to-retail-percentage/, would leave the bulk of production tax-free, for export, right?  No wonder growers don’t want to pay tax.  Or am I missing something?  UPDATE:  A friend says I am:  “If one taxes producers (or equivalently the processors, manufacturers, or wholesalers to whom they sell)  only those who are licensed will pay the tax in any case.  Others  will simply bypass the system and grow for the out-of-state market illegally, as they have for decades.  The result will be [to pick numbers] 1000 taxed tons of marijuana grown legally, and maybe 3 times as much untaxed and sold illegally to the export market.  The same will happen if you move the tax to the retail end.   In the end, the state only consumes and taxes 1000 tons, and another 3000 or so tons will go out of state.”

I was thinking revenue officials’ incentive to collect from sellers would bring them into the legal system.  But certainly not all of them, and maybe not many.  Any track and trace system will make my friend’s prediction come true, by neatly separately the legal market (for in-state consumption) and illegal market (for export).

UPDATE:  But neatly separating the legal and illegal markets means that illegal grows will be operating — and lots of them.  Law enforcement may be expected to be looking for unlicensed and untaxed grows, whatever the destination of their products and the residence of their ultimate consumers.

URL for article:  http://www.oregonlive.com/mapes/index.ssf/2015/05/oregons_big_marijuana_harvests.html

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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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