Superseded by https://newrevenue.org/2015/05/26/oregons-wrong-direction/, link here.
Earlier iteration: See UPDATE May 25, near the end of this post, for a somewhat more developed analysis. Still thinking this through. THIS WILL CHANGE.
Jeff Mapes at the Oregonian writes:
SALEM—Oregon legislators on Monday unveiled a proposed retail sales tax for marijuana that would replace the harvest tax approved by voters.
The proposed sales tax was one of the major provisions included in a new 104-page amendment aimed at implementing the marijuana legalization initiative approved last November by voters. Continue reading Oregon shifts to retail percentage? — Superseded
Here are excerpts from a May 13 article by David Downs in the East Bay CA Express that I pass along without necessarily agreeing:
California 2016 legalizers must chose between angering the medical marijuana community with new regulations, versus gaining mainstream voters — who want to see the pot trade “controlled.”
. . .
“Most experts agree that California has among the least structured systems of rules Continue reading Unresolved tension could fracture and kill CA reform efforts
While thinking about loosening 280E to allow tax deductions for everything but advertising, you need to define advertising. This is in connection with an article on 280E as applied in California, here or http://marijuanalegalization.about.com/od/RelatedIssues/fl/Down-the-Rabbit-Hole-of-Cannabis-Taxation-and-Advertising.htm, where this post appears as a hot link.
Defining advertising, for tax purposes, has been done. There have been lots of proposals to disallow deductions for advertising by requiring amortization of amounts paid to advertise. A recent one came from Republican Ways and Means Chair Dave Camp, and another came from Democratic Senate Finance Chair Max Baucus. To make that reform happen, you need to define advertising. (This is a Tax Reform staple.
Continue reading What is Advertising? – Ways & Means and Rachel Barry
This is a technical explanation of California law: Corporations can deduct, on their California state income tax returns, their expenses for advertising and marketing marijuana. But individual businesses cannot. Pass-throughs to individuals, like S corporations and LLCs, don’t provide these deductions to individuals.
Since 1982, Federal Tax Code section 280E has said sellers of federally illegal drugs, like cannabis, can deduct only “cost of goods sold” – the cost of producing or buying the product. California follows — “conforms” to — that federal law for individuals, but not for corporations. Continue reading Technicalities of California marijuana advertising discrepancy
Picking Winners: Deciding Who Gets to Grow Marijuana Commercially, https://newrevenue.org/2015/10/20/picking-winners-to-grow-marijuana/, pasted at the very bottom of this post, describes in detail six ways to pick winners, who get the privilege to grow:
- Self-selection (Responsible Ohio ballot ploy)
- Voucher privatization – Share the wealth
- Grandfathering existing growers
- Steep fees
- On the merits.
Professor Sam Kamin of the University of Denver Law School points out that Colorado has a seventh way Continue reading A 7th way of picking growers
In Denver, total retail taxes on marijuana of 20.05 percent get beaten when a retail employee sells out the side door. The moral of this story, to me, is collect some tax early – like tobacco and alcohol taxes, collected from manufacturers federally and wholesalers by states. At some point, a retail tax level is low enough that the danger of getting caught takes away much of the incentive to beat it. Continue reading The danger of retail-only taxes
A Forbes article points to a bill, sponsored by Colorado Congressman Polis, that would tax marijuana at 50 percent of price. But that’s a 2013 bill, from the last Congress, so it’s officially dead. We’ve learned a lot since 2013 about how much the market can bear at first.
UPDATE: The Forbes website just added a reference to this year’s bill. This year Congressman Polis is teaming up with Oregon Congressman Blumenauer to propose a lower rate, phased in, starting at 10 percent and ending at 25 percent in year five. Details here. Continue reading Forbes reports on 280E