I asked California Department of Tax and Fee Administration a couple of questions about why cannabis tax collections are coming in low. At the end are the questions and the CDTFA’s helpful answers, from Paul Cambra.
My reactions: I. The producer or cultivation tax collected only $1.6 million in the first quarter because retailers some how brought untaxed products into inventory before the tax was effective on January 1. Retailers then sold that untaxed product in early 2018. The standard excise tax procedure for taxing jurisdictions is to apply a “floor stocks tax” to product that escaped tax as it came into inventory (and sits on the shelf or the floor). See https://www.ttb.gov/tax_audit/floor-stocks-tax-faqs-answer.shtml. California did not have a floor stocks tax, so had a short-term loophole. Its effect will soon disappear.
II. The 7.25% sales tax collected a lot compared to the 15% marijuana excise tax because the sales tax
1. includes pipes and t-shirts and so on;
2. is based on a real price, while the excise tax is often based on an artificial or phony price (the “average market price”) under California regs;
3. includes the 15% tax in the base (for an extra 1.0875% evert time).
Continue reading California cannabis tax collections explained.
California released some info about cannabis tax collections May 11, 2018. I can’t figure some of it out. Questions below.
UPDATE: Dale Gieringer of California NORML answers, pointing out that most medical cannabis is not tax exempt. The only tax exemption is for product sold to patients who have bothered to get cards. So the sales tax figure is high because it includes sales of lots of medical cannabis. Few adult use licenses have been issued.
Continue reading Confused by California marijuana tax receipts
What’s wrong with taxing marketing expenses of opioid sellers? The article suggesting that tax in the hill.com is posted below (exclusive license has expired).
Here are some possible objections:
- The horse is out of barn – the problem is that this happened in the past. Most of the damage is done.
Response: Still, this works for the future.
- My tax policy friends will almost all insist, in the name of theoretical purity, on taxing all income the same. They will say these are real expenses, and should be deductible.
Continue reading Answering objections to a tax on opioid marketing
I’m to be on a marijuana revenue panel in Connecticut on Monday, April 30. The folks in Connecticut, like everyone else, want to know the bottom line. Whew. That leaves aside the preliminary and necessary questions of what to tax (weight or stated THC, I would say) and tax rates.
OK, jumping the preliminary issues, here’s a wild guess: $155 million a year after the market matures in several years. That’s $43 per inhabitant times 3.588 million population.
The $43 number comes from Colorado and Washington, which legalized two years before any other state. Both those maturing markets are collecting just about that much cannabis tax revenue now. Continue reading Marijuana revenue — can any state get $43 per capita, like CO and WA?
New York just started imposing an opioid “fee”; text of the law is here. That’s the fee or tax part of New York’s Opioid Stewardship Act, part of an omnibus health and mental hygiene Act, which is here. There is a lot of non-tax stuff in there
New York will collect from opioid sellers every year $100 million (unindexed for inflation). Here’s how. After the year ends, all opioid manufacturers and distributors will report how many morphine milligram equivalents (MMEs) they sold or distributed. Each seller’s fraction of the total amount of MMEs sold will be its fraction of the $100 million due. Retailers ordinarily don’t pay tax, and cascading sales (where one product changes hands several times) are taxed only once.
There are three carve-outs.
Continue reading New York State takes $100 million in tax or fee revenue from opioid sellers
I’ve learned a lot from my friend Jon Caulkins, a drug policy expert and professor at Carnegie-Mellon (we were among eight co-authors on the RAND report for Vermont, and he’s helped and encouraged me over the years). Jon worries about for-profit marijuana businesses, and prefers non-profit businesses. Fair enough, but let’s think about practicalities.
In an article in the National Review, “Against a Weed Industry,” Jon suggests, for the eight states where recreational cannabis is legal, “The Justice Department can simply send a letter warning that if the company does not shut down within a reasonable time, its owners will be arrested and its assets seized. . . . The Trump administration could phase out those for-profit businesses in favor of nonprofit organizations by issuing a new memo. . . . Shutting down state-licensed businesses could feed the black market, but not if nonprofit organizations are allowed to take their place.”
But I can’t see that happening. It would be very hard, politically and practically, to replace for-profit cannabis sellers “in favor of” non-profit sellers. Getting from here to there is not easy. Continue reading Forced conversion of marijuana businesses to non-profit? I doubt it.
OK, they call it a fee, but it looks like a tax to me. New York is collecting $100 million from opioid sellers -- with a few exemptions, like for Hospice use.
Here's the law: http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=S07507&term=2017&Summary=Y&Actions=Y&Text=Y, mentioned to me by Katherine "KT" Kramer of ASTHO.
Continue reading New York State’s $100 Million Opioid . . . Tax