Author: Pat Oglesby

Here’s how the California 15-percent retail marijuana tax is supposed to work:

[UPDATE:  The 90-day rule does not seem properly calibrated for outdoor growing, where an annual harvest presumably could get sold over 365 days — as consumer demand is presumably relatively steady all year.  To allow the tax to apply to the actual retail price, retailers would need to buy from sellers on a kind of Just In Time basis — not accumulating inventory beyond what they will sell in 90 days.]

Once a cultivator, manufacturer or distributor sells to a retailer, a 90-day clock starts running. The tax amount due depends on which one of two “Cases” fits the facts. Continue reading “90-day rule for California’s 15-percent retail marijuana tax”

As the idea of a robot tax gains interest, Indonesia has a narrow pro-labor tax that is actually in effect.

Tobacco is a huge killer in Indonesia, and the government there struggles to tax it. But it’s also a huge employer, so taxing tobacco nudges against jobs.

So Indonesia taxes machine-rolled cigarettes more than it taxes hand-rolled ones. Continue reading “Indonesian robot tax”

Don’t read this whole post.

Instead, a corrected view of how California’s retail tax works is here (at https://newrevenue.org/2017/10/27/90-day-rule-for-californias-15-percent-retail-marijuana-tax/).  So go there.

The superseded and incorrect material below, for the record, reflects my thrashing around before I understood what California was even trying.  Why anyone would want to read about that thrashing, I can’t imaginge, but I don’t delete much.  Nobody’s perfect. Continue reading “Arm’s length marijuana tax rule in California — superseded”

Speaking to old friend Peter Barnes’s VAT and Sales Tax class at Duke Law and Public Policy Schools today on Excise Taxes.  Here are slides (download): Barnes Sales and VAT 2017.

UPDATE:  This chart is valid as of June 26, 2018; a more comprehensive chart is at https://newrevenue.org/2018/06/06/cnr-recommends-cannabis-tax-chart/.

	Producer (medical, too, if *bolded*)	Retail (medical, too, if *bolded*)	Standard sales tax?	Tax break for medical marijuana?	Ratio of medical tax to adult use tax
Alaska	*$50/oz., unindexed*	0	0	0	100%
CA	*$9.25, indexed*	*15%*	7.5% on recreational	7.5%	>67%
CO	15% (often weight proxy)	15%	2.9% on medical	27.1%	10%
Maine	No	10%	5.5% on medical	4.5%	55%
Mass	No	13.75%	6.25% on recreational	20%	0
Oregon	No	20%	0	20%	0
Nevada	*Weight in lieu of 15%*	10%	6.85% on recreational	15%	41%
WA	No	*37%*	6.5% on recreational	6.5%	85%

This chart reflects my understanding as of 18 October 2017, and reflects recent changes in CO, MA, NV, and WA.  Comments and corrections welcomed.  A tweeted version overlooks Alaska’s full taxation of medical cannabis, corrected here by bolding $50/oz., unindexed above. Continue reading “State marijuana taxes today”

Why we have a right to tax deferred off-shore income, beyond allowing shareholders the limited liability of a U.S. corporation, by Steve Shay, building on the analysis of my hero, Charles I. Kingson, in The Great American Jobs Act Caper, http://heinonline.org/HOL/LandingPage?handle=hein.journals/taxlr58&div=17&id=&page= (paywall).

“The primary businesses of [the 10 biggest beneficiaries of the repatriation tax amnesty windfall] rest on one or more of: (i) technology patents, copyrights, and trademarks created under the protection of U.S. laws; (ii) U.S. food and drug approvals authorizing access to and assurance to U.S. healthcare consumers; (iii) the internet developed by the U.S. government and transitioned to private hands; or (iv) leases of valuable rights to U.S. oil and gas natural resources. All of these are fruits of U.S. public goods and legal infrastructure developed and maintained with U.S. taxpayer dollars. Yet, these companies have been permitted to routinely use transfer pricing and stateless income planning techniques to pay extraordinarily low rates of tax on vast swathes of their income—and now the plan is to give them an amnesty rate on pre-effective date earnings?”

Click to access Shay%2010-3-17%20SFC%20Testimony%20final%209-30.pdf

 

I’ve consistently said marijuana taxes can be too high at first. Fitch Ratings warns of that too, but supports its warning with this inaccurate statement: “Colorado, Washington and Oregon each lowered their cannabis taxes following legalization to address black market competition.”  https://www.fitchratings.com/site/pr/1029632. But it would be nice to get the facts straight.

Fitch apparently relies on material published April 20, 2016 (4/20 – get it?) by the Tax Foundation, which alleged, “Colorado, Washington, and Oregon have all taken steps to reduce their marijuana tax rates.” That was questionable too, even at the time, but there’s another problem: “lowered” is not the same as “taken steps to lower.”

Let’s start with Colorado. Continue reading “Inaccurate info about cannabis taxes”

The killer problem for carbon taxes is that they favor foreign manufacturers, and we want manufacturing jobs. Any carbon tax will provoke calls for border adjustment taxes – or border tax adjustments (BTAs). The difficulty in imposing BTAs is great. Professor Peter Barnes of Duke has guided my thinking on the issues involved, and some of this comes directly from him.  But this is my primitive thinking, for which he is not to blame.

How can we distinguish between imported goods that were manufactured using coal-generated electricity and goods manufactured using solar energy?  To create the right incentives, we should make that distinction.  But administering the distinction is impossible.    Continue reading “Border Tax Adjustments for Carbon Taxes — The ODC Model”

UPDATE 8 February 2018:  Thanks to my friend Keith Humphreys for linking to this post here.  THC in cannabis bud is very hard to measure reliably — and even if measurement were reliable, sampling can be gamed.  (Concentrates test more reliably.)  There’s a lot to this problem:  An analysis of taxing cannabis by THC content appears in RAND’s report for Vermont, starting on page 80 (free download). An analysis of taxing it by claimed THC content starts on page 84.

While a tax on claimed or stated THC might stand alone, the rest of this document looks at how a tax on THC might serve as an alternative minimum tax.

UPDATE 27 November 2017:  A stated THC tax can also serve as an alternative to a percentage of price (ad valorem) tax.  Such price-based taxes are typically the first cannabis taxes to appear — though they are primitive and weaker than weight-based taxes.

To start with a stated THC tax as an alternative minimum to a weight-based tax:  A cannabis flower tax could be imposed as the greater of a weight tax or a stated THC tax (using the THC figure the seller claims on packaging or in selling). The tax could be the greater of (1) $x per gram of product weight or (2) $Y per gram of stated THC weight.

Here are very rough notes on how such a tax might work (supplemented by comments from my friend Jon Caulkins at the end).

Example 1: Continue reading “Mechanics of stated THC tax on marijuana”

Minimum unit pricing – charging a minimum price for temptation goods – appeals to some students of cannabis legalization.

To me, government monopoly or high taxes can work better to serve policy goals. I’m just starting to think about this, and looking for pushback.

1. The successes claimed for minimum unit pricing often involve loss leaders – where temptation goods are sold at a low price so as to bring customers in to buy goods that produce more profit for the seller. To the extent that cannabis commerce is isolated, that problem goes away. Most cannabis retailers in the United States sell little other than cannabis. They may sell pipes, papers, and T-shirts, but none sell alcohol. I don’t know of any that sell food (other than cannabis-infused food) or household goods. So any price-cutting that cannabis sellers do today goes pretty much straight to the bottom line. Sellers are hardly making up for the loss by selling non-cannabis products..  A well-regulated cannabis market lets cannabis seller sell nothing or almost nothing but cannabis, I think.

Continue reading “Why minimum unit pricing for cannabis leaves me cold”

UPDATE:  Just tweeted (5 November 2017) that Oakland’s set-aside project is slowing legalization to a halt.  This link is illustrative:  “New hitch in Oakland pot permit pipeline.”

+++

The NORML Conference in DC on September 11 has me on a panel that with the proposed title, “Legalization as an Economic Stimulus for All.” And we may get into this question: “How is it that we can create a market that is inclusive to those who have been most disproportionately affected by prohibition?”  http://norml.org/conference

My take is: Let the government own the means of production, and hire people who were disproportionately affected. The government monopoly model is happening in North Bonneville, Washington, and in the State of Louisiana. Or take tax revenue to help those folks, or, in a less targeted way suggested by Arwa Mahdawi, to help African-Americans who have suffered especially from the War on Drugs. Continue reading “Panel for NORML: “Legalization as an Economic Stimulus for All””

Slides for talk in Denver August 30: Oglesby Revenue Cannabis Summit 3 post pub

 

The National Cannabis Summit has me speaking for an hour Wednesday, but its program, downloadable at https://www.nationalcannabissummit.org/program/, says I’m with the “Center for New Review.”  Googling that yielded nothing, so maybe this post will open up this website to anyone who’s curious.  (Welcome!  It’s Revenue.)

The National Library of Scotland has posted the enormous 1893-94 public domain Report of the British Indian Hemp Commission, and authorized anyone to repost it with attribution:  https://creativecommons.org/licenses/by/4.0/.  (Thanks.)  Any student of marijuana policy will learn something there.  There is lots of confusing vocabulary, and I’ll post some notes at some point, but I’m still wading through it.  Any student of marijuana policy will learn something there (and volume 3 is much more useful and understandable for a tax man — I’ll post that someday, but the entire report is at http://digital.nls.uk/indiapapers/browse/archive/74908458).   Dale Gieringer of California NORML told me about this Report years ago, but I just found it online.

So, in 20-page (or so) chunks, here it comes, starting with volume 1:

Vol 1 Indian Hemp text 1-19 74464868_19_38

IHD Vol 1 pages 19-38 or so74464868_39_58 Continue reading “British Indian Hemp Commission — Posting Volume 1”

I get to talk for an hour on marijuana revenue at the National Cannabis Summit in Denver on August 30 at 9 a.m. The sponsors write me: “Speakers are evaluated on several criteria, including audience engagement, and the results are posted online after the conference as part of our speaker ‘Zagat’s’ guide.”

OK then. I’ll try to be provocative, and hope for pushback (engagement) with statements like these:

• Cannabis revenue design should be a public policy issue; government revenue should be an afterthought.
• The optimal rate of crime is greater than zero. That includes black market crime of untaxed marijuana sales.
• Taxing marijuana only by price is untenable in the long run, and the Tax Foundation is simply wrong.
• Government monopoly is the safest way to distribute cannabis.
• Marijuana advertising should remain non-tax-deductible.
• Taxing bud or flower by THC is not realistic.
• Medical marijuana should not be tax exempt.

My friend Keith Stroup, past head of the marijuana consumer lobby NORML and still working with NORML for legalization, would not put government sales at the top of list of options for distributing marijuana. Bureaucratic inefficiency looms. Nonetheless, Keith authorized me to quote him expressing non-opposition to experimentation with the government as seller: “It is in the best interest of consumers to experiment with as many models of legalization as we can come up with so we can evaluate and see which models work best.” Continue reading “Stroup on government cannabis sales”

The marijuana community is not monolithic. The interests of consumers and industry often diverge.

My friend Jared Moffat, finishing up a stint with the Marijuana Policy Project in Rhode Island, authorized me to post this statement he had emailed me: “It’s fair to say that the medical marijuana players in the RI industry are doing little to advance legalization, and some of them are certainly obstacles because they want it done in a way that protects them/their investments. They only want to move forward if they think that’s advantageous to them. Very frustrating.” Continue reading “Marijuana Consumers vs. Industry”