Prepared remarks for NC Senate Finance Committee, July 22, 2021, on medical marijuana

Mr. Chairman and Members of the Committee:

Thank you for having me.  I’m Pat Oglesby.  I live in Senator Foushee’s district now, but I’m originally from the home of the Shad Festival, Grifton.  I’ve practiced tax law, been a staff lawyer for the Joint Congressional Committee on Taxation and the U.S. Senate Finance Committee, taught classes at the Kenan-Flagler Business School, and been a member of angel investment groups.  I’ve founded the Center for New Revenue, a non-profit that looks at marijuana revenue, and advised state governments on marijuana, pro bono and for pay.  

I’m an analyst, not an advocate.  There’s a lot of money on the table.  A billion dollars’ worth of medical marijuana was soldin the first 40 months of medical-only legalization in Maryland.  This month, a single medical marijuana license there sold for $8 million.

There’s another way.  In Canada, provinces started out having a government retail medical marijuana monopoly – online only, delivery only, no glitz.  In Louisiana, the 2 land grant universities, LSU and Southern, have had a monopoly on growing medical marijuana for years.  Federally illegal!  Yes, but the federal government knows that, and is winking – and not lifting a finger.

Continue reading “Prepared remarks for NC Senate Finance Committee, July 22, 2021, on medical marijuana”

Senate Marijuana Bill’s Taxes Are Old-Fashioned.

The new Schumer-Wyden-Booker marijuana legalization bill is available.

It’s disappointing that the sticks precisely to the early 2017 design of the Blumenauer-Wyden bill, with ad valorem taxes for five years before switching to “specific” (non-ad valorem) taxes, only at that late date taxing flower by weight and concentrates by THC.  See http://thehill.com/blogs/pundits-blog/economy-budget/327694-marijuana-legalization-grows-closer-with-senate-tax. 2017 is a long time ago for a drug that was first legalized in 2012; we’ve come a long way in what we know since then.

That five-year delay may have had some possible justification in 2017, but not now.  But even then, ad valorem taxes were outdated.  Sure, no one was taxing anything by THC content – but several states had already worked out taxing raw plant matter by weight, the state of the art tax system in 2017.  In the intervening four years, Canada, legalizing in 2018, moved straight into taxing flower by weight immediately, and concentrates by THC content almost immediately.  No five-year delay!  The system up north seems to be humming.  Lots of states tax by weight already, and Canada has the gold standard using both bases, weight and THC.  I don’t know why we don’t just go ahead and copy it — now.

Continue reading “Senate Marijuana Bill’s Taxes Are Old-Fashioned.”

Medical Marijuana Money – Making Senate Bill 711 More Cautious

With medical marijuana, there’s a lot of money on the table.  In the first 40 months of medical-only legalization in Maryland, a billion dollars’ worth of medical marijuana has been sold.  Last week, a single medical marijuana license there sold for $8 million. In that light, SB711’s $10,000 annual fee for licenses in the out years seems awfully small.  

Unleashing the power of the free market to innovate — that’s almost always what we want.  But not when it comes to intoxicants.  John D. Rockefeller, Jr., a Baptist teetotaler and a leading prohibitionist, hated alcohol as much as some supporters of SB711 say they hate marijuana intoxication.  But in 1933, he knew prohibition was dying, and urged retail sale of alcohol by states as he warned, “the private profit motive . . . makes inevitable the stimulation of sales.”  

Marijuana sellers should meet demand – not stimulate it.  A state agency won’t use marketing gimmicks, or push the limits on advertising restrictions.  If for-profit sellers are licensed, they can argue that North Carolina’s Constitution allows advertising as commercial free speech – and sue to invalidate any regulation that stands in their way. 

Canada has shown the safest way to legalize medical marijuana – sales by government agencies, for delivery only.  If you want conservative and restrictive, that’s the gold standard.  

State sales produce the most long-run revenue for the state, and they are the only sure way to keep the money in North Carolina.  SB711 says only North Carolina residents can get licenses.  But on June 21, a U.S. District Court in Missouri blocked that state’s resident ownership requirement as unconstitutional.  So SB711 would create lawsuits by wealthy out-of-state interests saying it, too, is unconstitutional – plus lawsuits by disappointed North Carolina license applicants.  

States can sell cannabis even though the drug is federally illegal.  The proof is in the State of Louisiana, which has been openly growing and selling cannabis, via state land-grant universities LSU and HBCU Southern University, for years.  The federal government has looked the other way.  The worst imaginable outcome is that the federal government would say “Cease and Desist” – and even that won’t happen. 

Sure, state sales have actual downsides.  State sales take time and money to set up.  If the state isn’t nimble, the illegal market will step up.  State sales of medical marijuana may convey a seal of approval and give government a vested interest in selling more.  Long-time marijuana advocates don’t trust government to get anything right.  But a state seller can set prices to make medicine affordable – rather than seeking to maximize profits.

One thing’s for sure:  If profit-seekers start retailing marijuana in North Carolina, they’ll never stop.  And they’ll push for more.  

Pat Oglesby, MBA, JD; Founder, The Center for New Revenue, 1830 North Lakeshore Drive, Chapel Hill, NC, 27514; po@newrevenue.org; 919-619-8838.  N.C. Bar License 7944.  Born Kinston, NC, 1947.  Bio at https://newrevenue.org/pat-oglesby-cv-2/.  Links at [here].   July 13, 2021

Picking marijuana licensees

Who can sell marijuana once it’s legalized? States have different ways of deciding. https://newrevenue.org/2020/09/23/who-gets-marijuana-licenses/. When states pick winners on the merits, here are some of the things disappointed license applicants do when government authorities pick others to sell marijuana, to the tune of Bob Dylan’s Rainy Day Women:

They’ll tell you that your process wasn’t fair.
They’ll say you didn’t take the proper care.
They’ll sue you over some small technicality.
They’ll sue you saying you showed partiality.
They’ll sue and say your interests conflict.
They’ll say the rules you’re writing are too strict.
They’ll say you didn’t hear their story straight.
They’ll sue and then the judge will make you wait.
They’ll tell you that you gave them a raw deal.
They’ll sue you.  If they lose, they will appeal.

So look ahead and try to think it through.
Lots of people want to sue.

Critique of NC medical marijuana bill, SB 711

I sent this message to the sponsors of North Carolina Senate Bill 711, which would legalize medical cannabis, and which I think needs work.

Dear Senators Rabon, Lee, Lowe, deViere, Harrington, Nickel, and Woodard:

Thank you for your leadership on medical cannabis.  I support the goal of your effort in general.  

I’m originally from Grifton in Pitt County, and am now a lawyer in Chapel Hill.  I served as a tax policy lawyer on the staffs of the Joint Committee on Taxation and the U.S. Senate Finance Committee in Washington many years ago, and have worked for Vermont and Washington as a paid marijuana revenue consultant, and for many other jurisdictions pro bono.  I’m the founder of the Center for New Revenue, a tax policy non-profit.  I have spoken and written widely on cannabis policy.  I have not worked for marijuana sellers.  (CV attached.)

Marijuana is a powerful drug that heals and helps people, but it intoxicates others, and a lot of money from medical marijuana sales will be on the table, so there’s controversy.

There are no easy answers.  But here are a few technical comments.

Continue reading “Critique of NC medical marijuana bill, SB 711”

State residency requirements for cannabis sellers aren’t working

Washington State is trying to let only Washington residents sell cannabis.  That’s not holding up.

My friend Crystal Oliver of the Washington Sungrowers Industry Association writes:

We have our own case winding it’s way through the courts: https://cannabis.observer/information_set/thurston-county-superior-court-brinkmeyer-v-wslcb-june-8-2020/ 

They’ve not been able to actually enforce this in WA practically speaking. These [out-of-state] interests just own all the real estate, equipment, and intellectual property of the marijuana business and get paid that way. 

Right now the WA ban on out of state ownership & investment just creates a situation where only those with well-paid, slick attorneys get out of state investment. 

The trickle-down hope for cannabis social equity licenses — Dan Riffle

My friend Dan Riffle, former staffer for the Marijuana Policy Project and for Alexandria Ocasio-Cortez and who now works for the District of Columbia, says this: https://www.facebook.com/OSULawDEPC/videos/156261703220642/?so=channel_tab&rv=latest_videos_card

“And you know if your view of wealth inequality, if your view of you know fortune 500 company CEOs and the problems that they pose is that there’s too many white men, which is definitely a problem, if that’s your only view of the problem, then maybe that’s a good solution to you to have you know four or five more millionaire billionaire minority applicants.” 

Trickle-down economics are not the only problem that social equity license plans face.  Other problems include phony licensees pretending to be deserving, and the competition that actual deserving licensees face from well-funded licensees. 

Here’s the transcription. 

Continue reading “The trickle-down hope for cannabis social equity licenses — Dan Riffle”

Social Equity in Cannabis — Dan Riffle

My friend Dan Riffle, former staffer for the Marijuana Policy Project and for Alexandria Ocasio-Cortez and who now works for the District of Columbia, says this:

“And you know if your view of wealth inequality, if your view of you know fortune 500 company CEOs and the problems that they pose is that there’s too many white men, which is definitely a problem, if that’s your only view of the problem, then maybe that’s a good solution to you to have you know four or five more millionaire billionaire minority applicants.” https://www.facebook.com/OSULawDEPC/videos/156261703220642/?so=channel_tab&rv=latest_videos_card or https://moritzlaw.osu.edu/depc/wp-content/uploads/sites/115/2021/06/Social-Equity-2.0-Panel-2-Corrected-transcript_for-website.pdf

Trickle-down economics are not the only problem that social equity license plans face.  Other problems include phony licensees pretending to be deserving, and the competition that actual deserving licensees face from well-funded licensees. 

Here’s are excerpts from the transcription. 

Continue reading “Social Equity in Cannabis — Dan Riffle”