The Center for New Revenue

Dear Members of the Vermont Marijuana Commission:

It was a privilege to serve as co-author of the RAND Report, Considering Marijuana Legalization: Insights for Vermont and Other Jurisdictions, http://www.rand.org/pubs/research_reports/RR864.html, and as the only attorney and tax person to do so.

I would be delighted to try to come to speak with you if you would be willing to hear me. In any event, here are the four main points I would make.

1.  Taxes can and need to go up over time. Already, economists say, “[D]espite having the nation’s highest tax rate, Washington . . . could generate significantly higher revenue by increasing the tax rate.” Continue reading “CNR comments to Vermont Marijuana Commission”

I was surprised and heartened to that California Governor Brown vetoed AB 1863, keeping non-deductibility of marijuana advertising expenses on California individual income tax returns. His rationale is revenue loss and the bill’s evasion of the budget process. https://www.gov.ca.gov/wp-content/uploads/2018/09/AB-1863-Veto-Message.pdf

And I was surprised and heartened to see that the California Legislature hasn’t overridden a veto since 1979.

So there is an opportunity for California to tinker with 280E conformity to treat individuals and corporations the same and not lose revenue. Continue reading “California 280E tax needs fixing”

For instance,

“Another point to which the attention of the Commissioners should be directed is the probability or possibility, that if the use of hemp-drugs is prohibited, those who would other-wise continue to use them may be driven to have recourse to alcohol, or to other stimulants or narcotics which may be more deleterious.” 

IHD vol 3 pages Title-17 or so74464868_53_72

 

Here is a message I sent Governor Brown of California about a bill to allow individual sellers of marijuana, like corporate sellers, to deduct advertising and marketing expenses on their state income tax returns:

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AB 1863 loses revenue.

California should treat individuals and corporations alike for marijuana tax deductions:  Let everything be deductible but advertising and marketing.

That might raise revenue (or maybe come out neutral to avoid 2/3).  It would be better for the budget. Continue reading “CNR urges veto of California AB 1863”

Per-gram taxes on marijuana flower in Colorado have dropped over half, as prices collapse.

For July to September 2018, here are the new producer tax rates for seven categories of marijuana not sold to third parties in Colorado.

Flower: AMR (Average Market Rate) = $846 per pound.
Tax = $126.90 per pound, or approximately $0.28 per gram.
[The highest AMR for flower was $2,007, in the early days, yielding a tax of $301.05 per pound, or $0.66 per gram.]

Continue reading “Colorado’s marijuana tax continues to decline”

I don’t work for marijuana sellers, so why should I give them free advice?  Because I want to keep their ads and promotion non-tax-deductible under 280E.  Ads irritate parents, favor Big Business, and stimulate demand.  They are a frill for consumers.

But even without ads, cannabis sellers have an easy, low after-tax cost way to show customers their products are special.

The customer walks into the retail store, and sees a live feed of suppliers’ grows.  Continue reading “How craft growers might work around 280E”

I had the good fortune to be co-chair of the Regulatory and Tax Structure Working Group of the California Blue Ribbon Commission on marijuana legalization – a project of the Lieutenant Governor and the ACLU of Northern California.  In connection with that work, I spend two nights and parts of three days in Humboldt County, the heart of the cannabis-growing Emerald Triangle.  During a drive between San Francisco and Humboldt, I asked Terrance Alan, a long-time prominent member of the California cannabis community, what would be a fair after-tax price after legalization.  I got a quick answer: “$35 an eighth.”  That’s $35 for an eighth of an ounce.  With standard quantity discounts, that results in a full ounce selling for under $250.

Maybe my friend Terrance would like to keep the price high by providing income to growers; maybe I would just as soon see the government get a lot of the money.  But public health folks like high after-tax prices, too.

After-tax prices in California are still high, as the market gears up — in the range of $40 to $70 an eighth.  But in Oregon, where prices have collapsed, and with a low, price-based tax, grams are selling after tax for $4 – or $14 an eighth.

When I circled back to Terrance to confirm using that quote, he wrote:

“I do still stand behind my statement.  If prices drop as you see them in Oregon, the only growers California will have will be a couple of large corporate farms that did not exist 2 years ago.  No equity growers in SF, the entire culture, families, lives and a 40 year culture of medical cannabis wiped out in pursuit of profit and redistribution of wealth to the government in the form of taxes.  There is a balance, shouldn’t government temper a policy which effectively wipes out the life blood of thousands of families tied to smaller footprint growing.  I believe that we should have policy, with teeth,  to keep the best grower producing the most curious strains, which are really a host of brands, not just the different names on stickers propped up by marketing .  Oregon did not have a vibrant cannabis production chain to lose, they got the cannabis from California.  They lost in different ways, but not at the expense of a generation of growers.  California has the growers and a lot to lose in pursuit lower prices to the consumers who will receive the just passable quality.”

California is considering letting individuals deduct marijuana advertising expenses on California state income tax returns – for the first time. The bill isA.B. 1863, and is pretty far along. The text is at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180AB1863 and far below.

I’ve long thought 280E was partly justified, and partly overbroad.  A compromise could treat individuals like corporations, allow deductions for non-problematic expenses, and not lose revenue. Continue reading “CNR opposes California tax cut for marijuana ads”

Policy makes strange bedfellows.  The local paper is stirring up doubts about the state liquor monopoly, and it should look for problems, but I’m still for government sale of intoxicants, as explained here:  https://www.huffingtonpost.com/pat-oglesby/marijuana-under-president_b_8207864.html, and here:  https://www.rand.org/pubs/research_reports/RR864.html (download).

Here are some emails:

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8/13/2018 10:09 AM
Dear Folks at the Christian Action League:

The Center for New Revenue opposes privatization of liquor stores. The profit motive for liquor sales (or for marijuana sales) is not the people’s friend.   [Letter to N&O, below, was attached.]

Pat

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Aug 13 (4 days ago)
Response (in part):

Thank you for this information, Pat. The Christian Action League has long held the same opinion and appreciates those who are willing to speak out clearly on both issues of privatization and marijuana use. Continue reading “Allied with Christian Action League on Government Liquor Stores”

UPDATED 4:44 PM EDT 17 August 2018:  Maryland Gubernatorial candidate Ben Jealous tweets, “When I am governor, we will finally pass universal pre-K in Maryland. How will we pay for it? By legalizing, regulating & taxing Cannabis for adult use.”

My first reaction was that that revenue scheme will happen right after Mexico builds the Wall.

But, with a lot of caveats, taxing marijuana could pay a meaningful fraction of pre-K costs Continue reading “Can Marijuana Taxes Pay for Pre-K?”

The Raleigh paper recently exposed some waste and abuse in the North Carolina state liquor monopoly.  Sure, government liquor stores create problems, but the private profit motive for alcohol sales, like the private profit motive for marijuana sales, works against public health. My public health friends have understood that tendency since the Rockefeller Report preceding repeal of alcohol Prohibition.

Here’s a letter, just a beginning of a long argument, I wrote the author of the N&O article: Continue reading “The Center for New Revenue urges keeping liquor stores”

The North Carolina Legislature stopped counties from banning plastic bags, so I wrote a Democratic Legislator I know:

“I am particularly interested in supporting candidates who will publicly support letting localities ban or tax single use plastic bags.  If you know some who will email me their support or otherwise go on the record, I will try to help them out a little.  What do you think?  Is that a helpful approach?”

He’s asking around. I have had one taker so far, and sent her $100.  A token, but still.  UPDATE 21 August:  2 takers, for $200 total.

Tax Regulators in Alaska are considering cutting the $50 an ounce tax on marijuana bud or “flower” to $25 for “immature flower” that appears “loose” or “wispy.”  Earlier post is at https://newrevenue.org/2018/08/02/tax-cut-for-wispy-buds-in-alaska/.

That seems like a nearly impossible line to draw — a huge judgment call.  But how about putting the decisions on the internet? Each low-taxed item would be photographed and uploaded.  The public could judge if government is overreaching, or yielding to taxpayer pressure.

Here’s another fallback:  Are wispy buds less appealing to smokers, and so destined for concentration? Continue reading “More on “Wispy” in Alaska”

The tax on marijuana bud or “flower” in Alaska is $50 an ounce.  Regulators there are considering cutting the tax to $25 for “immature flower” that appears “loose” or “wispy.”

My reaction is:  No!  Please don’t! Unforced error!

 

“Loose” and “wispy”?  Who’s to say? Continue reading “Tax cut for “wispy” buds in Alaska?”

I think most of today’s article on cannabis taxes by Renu Zaretsky of the Tax Policy Center is just right.  It’s at https://www.taxpolicycenter.org/taxvox/high-hopes-and-altered-states-choices-marijuana-and-tax-revenue-0.  Congratulations.

But as a first reaction, I have a few quibbles: Continue reading “Reaction to Tax Policy Center’s article on cannabis taxes”

The Center for New Revenue has signed a letter, begun by Americans for Tax Fairness.  The summary gives you the idea:

OPPOSE “ROUND 2” OF TRUMP-GOP TAX CUTS – STOP ANOTHER MASSIVE GIVEAWAY TO THE WEALTHY Continue reading “Center for New Revenue opposes federal tax cuts”

My usual take on cannabis taxes:  tax low at first, tax by weight or THC, be careful about exempting medical.  Government sales are better.  After one of my co-panelists enthuses about female and minority MARIJUANA MILLIONAIRES, I show nervousness — I don’t think there will be very many.  Connecticut Legislative Commission on Women, Children and Seniors Cannabis Forum, Legislative Office Building, Hartford, Cannabis Revenue Panel, April 30, 2018. Video at http://ct-n.com/ctnplayer.asp?odID=15247; my intro at 39’30”; main remarks at 2’34”.

Continue reading “Video of Connecticut Marijuana Panel”