Marijuana Revenue Competition — Look Out Below — in State Tax Notes

Marijuana Revenue Competition — Look Out Below

Exclusive license with State Tax Notes expired, so here is  the article: Tax Competition FINAL STN 5.7.18 Oglesby, from State Tax Notes, Vol. 88, No. 6, 2018.

Abstract

Beyond the ever-present illegal market, a more subtle threat to marijuana revenue lurks:

Tax competitors (think: tax havens) threaten subnational jurisdictions that can’t or don’t control their borders.

This article presents a framework for looking at threats to marijuana revenue:

1. The illegal market can be marginalized by law enforcement or low taxes.
2. Only low taxes can defeat legal tax competitors.
3. Tax competition threatens local retail taxes more than state retail taxes.
4. Tax competition threatens local producer taxes much more than state producer taxes.
5. Federal legalization would ipso facto expose state taxes to daunting competition.

Oglesby, Pat, Marijuana Revenue Competition — Look Out Below (May 7, 2018). State Tax Notes, Vol. 88, No. 6, 2018. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3190279