How scales in Colorado make its weight base work — Updated 27 October 2015

Here’s how Colorado implements its marijuana tax based on weight.  Many, many growers have to pay that tax, so it needs to be simple — and to be verifiable.

I have been told the scales cost a couple of hundred dollars, so they are a step up from cheap food scales like these:  http://thesweethome.com/reviews/best-kitchen-scale/ Continue reading How scales in Colorado make its weight base work — Updated 27 October 2015

ITEP’s 13-pager on marijuana taxes

The Institute on Taxation and Economic Policy just posted this report on state marijuana taxes: http://www.itep.org/pdf/marijuanaissuesreport.pdf. It’s useful, I say.  Richard Phillips is the author.

Here is a list of some of ITEP’s funders: http://www.itep.org/about/funding.php

 

Louisiana MMJ bill

The Louisiana Senate has passed a sunsetted medical marijuana bill providing a single license for production of the crop.  The fee will be set  later.

“The Department of Agriculture and Forestry shall develop an annual, nontransferable specialty license for the production of prescribed marijuana for therapeutic use and shall limit the number of such licenses granted in the state to no more than one licensee. Continue reading Louisiana MMJ bill

CO weight taxes

Here’s a chart showing how Colorado has been converting the so-called 15-percent producer tax to a weight based tax:

Bud price Bud tax in pounds Bud tax in ounces Bud tax in grams
2014 $1,876 $281.40 $17.59 $0.62
2015 $2,007 $301.05 $18.82 $0.66
Trim price Trim tax in pounds Trim tax in ounces Trim tax in grams
2014 $296 $44.40 $2.78 $0.10
2015 $364 $54.60 $3.41 $0.12

2014 data used to create the 2015 rate comes from here:  https://www.colorado.gov/pacific/sites/default/files/AverageMarketRate.pdf

2014 rate is explained here:  https://newrevenue.org/2014/04/09/colorados-marijuana-tax-62-cents-per-gram-of-flowers/

Sin tax theory

Taxing “sin,” or something the state disapproves of, gives the state a financial incentive to increase it. This article or opinion piece from Alabama lists tobacco, alcohol, gambling, marijuana — and expands the list to include abortion. It contains this quote from Dave Barry:

“The only danger I see looming ahead is that the tobacco industry will get tired of serving as the bag person for the anti-smoking effort and actually quit selling cigarettes. In that case, the only way to keep the anti-tobacco money flowing in would be for the various governments to join forces with the legal community and sell cigarettes directly to the public out of post offices.” Continue reading Sin tax theory

CO bud tax is 66 cents per gram.

Colorado’s current producer tax rates on marijuana – replacing the 15-percent tax in the Constitution – are the subject at https://www.colorado.gov/pacific/sites/default/files/AverageMarketRate.pdf.

Bud is taxed at 66 cents a gram, trim at 12 cents a gram. Here’s how we get there:  The “average market rate” — which substitutes for real prices — for bud is now $2,007 a pound; for trim, $364 a pound. Multiply those by 15 percent to get the tax per pound, divide by 453.592 to get the tax per gram.  That’s a little higher than in 2014.

Taxes and bridges

One way to approach tax design is  like bridge building.  Anyone can do it.  Throw a plank over a creek and you’ve got yourself a bridge. Say marijuana consumers pay an extra X percent at the retail counter and you’ve got yourself a tax.

At a primitive level, that all works.  For a while.  But the plank won’t handle much traffic.  And with the marijuana tax, what happens when market forces drive prices (and taxes) down?  What about a free pot with pipe purchase?  And employee discounts?  And pilfered product — or product that’s “lost” in transit?  The way we tax alcohol and tobacco is not vulnerable to these problems.  More here:  https://newrevenue.org/2015/04/28/weight-base-arbitrary/.