A report from the ACLU of New Jersey calls for phasing in marijuana tax rates, stepping rates up from 5 percent in the first year to 25 percent eventually. It follows phase-in proposals by Congressman Earl Blumenauer and others, and a law on the books in Pueblo, Colorado, described here.
This phase-in makes sense. The legal market can bear more tax as time goes on. Startup costs and uncertainties put the nascent legal market at a disadvantage that will fade over time, especially as enforcement of the new legal set-up takes effect.
The Tax Foundation finds fault with many excise taxes (tobacco, e-cigarettes, sugar, airline services, medical devices, you name it – though, to be fair, the Foundation puts gasoline taxes on the table). So it’s no surprise that it proposes very low federal excise taxes on marijuana. Its federal marijuana tax would be a nickel a gram — compared to the $1.76 per gram tax on the books in Alaska. That is supposed to bring in just $500 million a year nationwide. That looks like chump change. (It takes credit for revenue from taxes that treat marijuana like milk — a consequence of legalization.)
The Foundation doesn’t mention what happens to the anti-marijuana-advertising rule of Tax Code section 280E, which is bringing in lots of revenue, according to the complaints of retailers. Any modification of 280E would offset other revenue gains. It could wipe out all the revenue from the chump change excise tax.
OK, the Foundation puts forth an alternative federal tax that would raise more — but doesn’t include that higher tax in reaching a $28 billion revenue estimate for marijuana taxes annually, at first. Here are excerpts from the Foundation’s recent report, Continue reading “Chump change from Tax Foundation”
NYU panel on marijuana tax: For a video, click here or go to https://www.youtube.com/watch?v=o5Ob81JIRVk&feature=youtu.be&. Beau Kilmer moderates; I start off, followed by Miles Light, Steve Davenport, and Congressman Earl Blumenauer. The Congressman still clings to total repeal of the 280E tax, despite some surprise at that stand from an audience member.
Here’s an timeline of my comments, on the tax base:
Tax #cannabis by
9’35″ 280E no deductions for ads Continue reading “NYU tax panel”
Having looked at deliberately low Post-Prohibition federal alcohol taxes as a model for low early cannabis taxes (with the RAND Vermont report alluding to a “tax holiday”), I was glad to see some state history pointing in the same direction. The following is from “The Failed Promise of Legal Pot,” By Tom James, in the Atlantic:
“Rear Admiral Luther E. Gregory . . . held the solution to a much earlier black market in Washington state. Continue reading “Ultra-low marijuana taxes — but only at first”
Updating a post from 2013, which reported that 280E was “Not Strictly Enforced.” First, the old post; then, some current reactions. Continue reading “280E Enforcement”