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 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  But even then, ad valorem taxes were outdated.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;; 919-619-8838.  N.C. Bar License 7944.  Born Kinston, NC, 1947.  Bio at  Links at [here].   July 13, 2021

Picking marijuana licensees

Who can sell marijuana once it’s legalized? States have different ways of deciding. 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: 

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:

“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.” or

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 are excerpts from the transcription. 

Continue reading “Social Equity in Cannabis — Dan Riffle”

Marijuana tax class

Preparing for another guest lecture on marijuana tax policy, for the June 30 class of my old friend from Senate Finance Committee staff days, Chief Tax Court Judge Maurice Foley, Jurist in Residence at the University of San Diego, I shrink at the task.

Nobody knows how to tax cannabis.

We don’t even know what we’re dealing with.  Cannabis consists of at least 545 distinct compounds, like THC, the main intoxicant, and CBD, innocuous enough to be sold over the counter.  But some of those other 543 compounds, other cannabinoids and terpenes and maybe more, may create an “entourage effect” more powerful or at least different from what isolated compounds give.

And then we’ve got folks taking CBD and turning it into new, engineered products, like delta-8 – milder than delta-9 THC, but still an intoxicant.

And what are we so mad at that we want to tax weed?  Some people like weed so much that they overdo it, and can’t quit.  Jerry Brown worried that a nation of stoners would not accomplish much.  Maybe there’s a puritanical “kill-joy” streak that gets nervous when people have too much fun by artifice.  Well, keeping the price high makes it harder to kids to afford with their pocket change.

But marijuana can be medicine – or at least some of its compounds can, and the whole plant, with its entourage effect, can.  How can we know when it’s medicine and when it’s recreational?  (We can’t, at the margin.)  Meanwhile, recreational users say its benefits – to them and to society – outweigh its costs.

What tax base do we use?  The main nominees are price (ad valorem), weight, and THC (potency).  

Adding to complexity, we’ve got all kinds of products.  There’s raw plant matter, with subcategories of bud (flower), trim (leaves), and more – all taxed at by different states at different rates per gram.   

And there are products that are processed or “concentrated” from raw plant matter, like edibles (brownies, gummy bears) and other products, like tinctures, suppositories, and powerful “wax” or “shatter”.  

Taxing by price is simple, or it can be.  Most states that tax by price use one rate for everything.  Illinois complicates things, with a 20% rate for edibles, but a split rate for everything else:  a 10% rate for everything else with less than 35% THC, and a 25% rate for everything else with 35% or more THC.  In practice, that complication aims to tax flower at 10% and “wax” or “shatter” at 25%.  

Some states tax raw plant matter by weight, early in the supply change, whether it’s sold as raw plant matter or processed, with different categories – bud or flower being taxed at a higher rate per gram than less powerful and less valuable trim or leaves.  Many states create intermediate categories, like small bud and immature bud, with tax rates between the rate for flower and the rate for trim.

Canada taxes flower and trim (that is, raw plant matter) by weight, and everything else by THC content.  

New York and Connecticut tax by THC across the board – with different rates for different products.  Here are New York’s tax rates per milligram of THC:

(1) Flower 0.5 cents;

(2) Concentrated cannabis 0.8 cents; and

(3) Edibles 3 cents

Connecticut has different rates, but similar categories and ratios.

These ratios come, apparently, from a single study out of Colorado in 2015.

Maybe all this uncertainty, and these experiments, will show how marijuana needs to be taxed.  Don’t think it won’t happen just because it hasn’t happened yet.

Government monopoly cannabis retail sales in Canada — preliminary

How are government monopoly cannabis retail sales working in Canada? Pretty well, maybe.  There’s a lot to learn.

Most provinces allow private retailing.  Two of those that don’t, Quebec and Prince Edward Island, have reportedly done the best at capturing market share from bootleggers.

Brock University Business School Professor Michael J. Armstrong presents this data:

 Michael J. Armstrong, “Legal cannabis market shares during Canada’s first year of recreational legalisation”, International Journal of Drug Policy, Volume 88, February 2021, 103028,

I don’t know how much to make of that data, which is now old.  Ontario was having trouble then, and at one point switched from government to private retailing.  But government monopoly retailing in two provinces was reportedly doing well at defeating the illegal market.

Beyond market share, “[i]n 2019, Quebec’s monopoly marijuana retailer – Société québécoise du cannabis (SQDC) – said it would not carry cannabis vaporizers ‘in the light of many health problems.’  Quebec also bans ‘sweet or savory edible products,’ including marijuana-infused chocolates, as well as all topical cannabis products.”

Maybe that’s a bug, driving consumers to bootleggers, or to neighboring provinces.  Or maybe it’s a feature, keeping consumers away from vaping (when was that vaping scare, anyway?) and keeping kids away from cannabis candy.

Lots to think about.

Marijuana mega-millions

Legislatures that legalize marijuana are creating fortunes for friends, so how great the temptation must be to help campaign donors who want to get rich quick by getting licenses to sell marijuana.

Here are case studies from two states where recreational marijuana is not legal.  But medical marijuana alone brings in mega-millions.

Here’s what happened in Florida:

“Less than 24 hours before the Florida Legislature passed the state’s first medical marijuana law in May 2014, Matt Gaetz and other members of the state House of Representatives rewrote the bill to limit who would be able to get in on the ground floor of what has since become a billion-dollar business.

“A number of Gaetz’s friends and allies managed to squeeze through that narrow door. Among them:

“— The brother of Gaetz’s friend and fellow state Rep. Halsey Beshears, who co-founded one of Florida’s first licensed marijuana companies and amassed a fortune currently valued at about $600 million — and became a major Republican Party donor.”

And in Pennsylvania:

“Cultivation and processing operations are fetching $100 million and more. And dispensary licenses are commanding prices of $20 million-$35 million for each storefront as the state’s retail sector consolidates.”

Continue reading “Marijuana mega-millions”

Why the federal government won’t legalize marijuana soon

A friend who advocates for social equity in handling cannabis profits said on a webinar yesterday that federal legalization needs more time – so don’t rush it.  We don’t know how to protect social equity licensees, for one thing.

And Ulrik Boesen of the Tax Foundation has a bunch of questions, like these:

“How does the federal government design an excise tax for this complex market without disrupting state markets? How can federal and state testing and product safety requirements be aligned, considering how much these differ state by state?”

We do indeed need more time.  

To figure out how to reinstitute alcohol taxes after a lapse during Prohibition, Congress devoted four fill days of joint hearings to liquor taxes alone in December 1933.  Unlike with hemp drugs, we had already had lots of experience taxing liquor.  But Congress studied it thoroughly anyway.

Continue reading “Why the federal government won’t legalize marijuana soon”

Pennsylvania Marijuana Monopoly + Taxes = Belt + Suspenders

An article quotes me praising state marijuana retailing over the for-profit alternative — in light of a bill in Pennsylvania to allow just that. The article, at, is throrough, but paywalled. It gives no prediction for the bill’s prospects.

Continue reading “Pennsylvania Marijuana Monopoly + Taxes = Belt + Suspenders”

280E MJ Tax Technicality, Lawyering, and Risks

A draft sent from me to scholarly private marijuana tax attorney Kat Allen (Tax L.L.M. from NYU) is followed by her response.

My draft:

At a webinar put on by MJbizdaily last week, two contrasting styles of tax lawyering were on display.  Some say section 471(c) lets taxpayers reduce their tax bill under the section 280E Selling Expense Tax; some say it doesn’t.  I don’t know the merits of the 471(c) issue, and hope not to study them.

Continue reading “280E MJ Tax Technicality, Lawyering, and Risks”

Marijuana — Friend or Foe?

Many say marijuana is only good or only evil. (I’m for careful legalization, and sharing the wealth). But this septuagenarian friend, writing in early 2021, has a different take — but not one-sided. There are lots of folks who see both sides, like my old friend:

“I quit, roughly 13 years ago, give or take a few years.  I came to a fork in the road—tennis or reefer.  I could not continue to do both.  The reefer was having too much effect on my stamina and my tennis.  I was getting clobbered by people I used to beat.  So I gave up on the reefer—easily done and done in a fell swoop—and sure enough the tennis got better, until it didn’t, like recently, because of age.  I have never looked back and don’t miss being high.  If ever or when I become decrepit, I will do it again.  It was fun, but not, one hopes, for another decade or so.” 

Continue reading “Marijuana — Friend or Foe?”

280E Is a Bastard. So What?

Critics of the 280E marijuana Selling Expense Tax point out that it was conceived by advocates of the discredited War on Drugs:  “Section 280E was born of politics – at the height of the war on drugs, in 1982.”  Yeah, well, in some way, 280E is illegitimate. But a child born out of wedlock might turn out to be Alexander Hamilton.

The 280E Selling Expense Tax is overbroad, for sure, but it has two big things going for it – from the perspective of much of the marijuana community.

1.  Advertising and glitzy marketing appeal to kids – and irritate their parents, to the detriment of legalization efforts.  “Marijuana sells itself,” the saying goes.  The commercial free speech doctrine says we can’t ban ads, but sophisticated consumers don’t need the ads or glitz – or the celebrity endorsements.  The 280E Selling Expense Tax makes those kinds of thing non-tax-deductible. 

2.  Big Business advertises more than small business.  Mom & Pop – and social equity licensees – can’t afford the billboards, or deploy the marketing know-how that corporate giants specialize in.  Think Budweiser ads.  And recently, “$1 out of every $6 spent on restaurant advertising in America [was] done by McDonald’s.”  That doesn’t count Burger King, or KFC.   Mom & Pop rely on word of mouth. Big Marijuana wants to start deducting ad expenses — and Big Alcohol and Big Tobacco want to get in on the game.


The marijuana community, and especially small businesses and growers (whom the 280E Selling Expense Tax barely grazes), might consider not so much the parentage of 280E, but its qualities and defects (yes, it’s overbroad in denying deductions for wages of retail clerks – a selling expense).  But some tax is going to replace 280E — with a more direct hit on consumers if not growers.

Not all bastards deserve condemnation.