Basic marijuana questions for tax and drug policy

For marijuana, how might drug policy and tax policy work in tandem?

Should federal law be changed to let marijuana sellers deduct advertising and other expenses? (Only the cost of marijuana is deductible now, thanks to 280E.) What would be the revenue cost if 280E were repealed, or targeted at selling expenses alone? (For another day – should expenses of advertising alcohol, sugar, tobacco, etc., become similarly nondeductible?)

What excise tax bases might the federal government use? Price, weight, THC potency, canopy grow area, electricity use, or what? Should there be more than one federal tax as time goes on? What about fees?

How much revenue is available? In other words, how much tax can the legal market bear? Will that amount go up over time as the legal market cuts costs?

Should medical marijuana be exempt from federal taxes? If so, would states’ definitions of “medical” control?

Should homegrown marijuana be exempted from federal tax? If so, how much per person? What about a nominal registration fee to grow at home (as in the defeated “Responsible Ohio” proposal)?

Where should tax be collected? (In light of various state commercial structures, who should be the taxpayer – grower, retailer, middleperson?)

How should federal taxes deal with existing state and local taxes? Is a federal tax credit for state and local taxes totally far-fetched?

How do efforts to enforce new tax laws relate to how much tax the market can bear? How much black market activity should the public tolerate? In aiming at a revenue target, should revenue maximization be the goal? If not, what should be?

Can regulatory capture be avoided? With the federal government nudging against the private profit motive through exempting state and local government sellers from RICO (and income taxes; see Leff, http://www.law.indiana.edu/instruction/tax-policy/assets/leff-government-owned.pdf), will government stores gain steam?

What else?

 

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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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