Testing Marijuana for Pesticides, continued

Here are new proposed testing regulations in California — but now I follow up on a recent post, where I said that while detecting cheating in folks who test marijuana for THC might be tricky, detecting cheating in folks who test marijuana for pesticides would be a snap. Just see if follow-up testing detected any pesticides; if so, start worrying.

But a chemist friend lets me know that there is more to it:

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I differ in the pesticide opinion at the end of the article.

In science, there is no ‘zero’, there is only ‘less than’ or ‘not detected’. Continue reading “Testing Marijuana for Pesticides, continued”

Corva’s attack on cheating on marijuana plant testing

Testing companies gain customers if they can report falsely high THC in cannabis plants — and charge low prices. A friend says she quit the testing business because as an honest tester she was losing business to cheaters.

Thanks to Bob Young of the Seattle Times for brining Dr. Dominic Corva’s write-up to my attention.  (This blog doesn’t have enough readers to scoop him.)

My friend Dr. Corva looks at the cannabis testing problem in Washington.  His full write-up is here: http://cannabisandsocialpolicy.org/taming-thc-inflation-silver-bullet/.

I think Dr. Corva is a smart and conscientious advocate and thought leader, and I’m always interested in what he is thinking.

Dr. Corva’s Proposal:

“Normalize lab results by lab, and require only the percentile of each result to be listed on the package rather than a precise percentage.”

He elaborates on the problem this way: Continue reading “Corva’s attack on cheating on marijuana plant testing”

California clean-up bill does not fix tax blunder

California Board of Equalization elected Member Jerome Horton came up with an October surprise to illustrate a tax weakness in Prop 64, the California marijuana legalization initiative.  That weakness didn’t prevent its passage, but it lingers.  And a new 79-page clean-up bill does not fix it.

Member Horton alleged that a tiny, technical, last-minute drafting change in the California 2016 marijuana initiative could cost the state $50 million, starting in November. Indeed, the Board of Equalization has adopted his view and officially confirmed that the current sales tax on medical marijuana just disappears – for a while.

I don’t know how anyone would have standing to sue to reverse that ruling. So, apparently, unless the Legislature acts, the total tax on medical cannabis, over time, will be:

— 7.5%, (through the November 8 Election) then
— 0% (from certification of ballot results through 12-31-17), then
— 15% plus weight tax (starting 1-1-18).

For details, see this old post: https://newrevenue.org/2016/11/12/5032/.

Continue reading “California clean-up bill does not fix tax blunder”

Marijuana legalization grows closer with Senate tax proposal

Full article is at the link here.  Intro to new piece for thehill.com is:

Want to legalize marijuana federally? Propose sensible taxes on the drug.

That’s the tactic of a new bill from two Oregon Democrats: House Ways
and Means Committee member Earl Blumenauer and ranking Senate Finance Committee member Ron Wyden. It takes on tough questions: What should a marijuana tax measure? Should it tax medical marijuana? The Marijuana Revenue and Regulation Act (MRRA) provides thoughtful answers.

What to tax?

The 64-page bill, S. 776, and House companions H.R. 1823 and 1841, starts out problematically, taxing marijuana by price for a five-year transition period, but ends up brilliantly, with sophisticated weight-based taxes for the long run. A companion bill repeals the useful current tax on advertising. Continue reading “Marijuana legalization grows closer with Senate tax proposal”

Critique of Blumenauer-Wyden marijuana tax proposals

Superseded by this (http://thehill.com/blogs/pundits-blog/economy-budget/327694-marijuana-legalization-grows-closer-with-senate-tax).

Congressional advocates for marijuana legalization, led by Oregon’s Congressman Blumenauer and Senator Wyden, introduced three bills to advance the process. (Dividing the package allows Committees to consider parts simultaneously, rather than one after the other. That may be wishful thinking.)

Here’s an off-the-cuff preliminary reaction to the tax parts of the package.  I’ll work to refine the analysis.

For tax, the package has strengths and weaknesses. Continue reading “Critique of Blumenauer-Wyden marijuana tax proposals”

NC HB2: What Would The Founders Do?

What’s the solution to NC’s broken bathroom law? Just look to the Founders.  1200 words here. Summary below.

I.  Substance – way forward is clear:

For bathrooms, repeal birth certificate rule – HB2 is indefensibly wrong on Texas wrestler; replace with old law – Jim Martin.

For everything else, local option.

II.  Procedure is hang-up – Rs want to limit city power on local option Continue reading “NC HB2: What Would The Founders Do?”

HB2 repeal — local NDOs revived

UPDATE 31 March 2017:  Rather than delete an old post, I’m using the link to post information about the 15 local nondiscrimination ordinances that the North Carolina General Assembly brought back to life March 30. HB2 had repealed them; yesterday’s law overruled that repeal.  PDFs available on request from lawyerpo@yahoo.com. Continue reading “HB2 repeal — local NDOs revived”

“Marijuana Taxes — Present and Future Traps” from State Tax Notes

Three killer traps threaten early cannabis taxes: a feeble tax base, inflexibility, and carveouts. Essential enforcement can’t be guaranteed. And a tax that sputters along today could conk out if an interstate race to the bottom or competing federal taxes materialize.

4-week paywall has ended.  Full text (7,000 words) of “Marijuana Taxes — Present and Future Traps” from State Tax Notes of January 23 is at marijuana-tax-traps-state-tax-notes-oglesby-1-23-17.  Here are intro and conclusion:

This article will examine:
• the facts on the ground for recreational marijuana taxes;
• inherent weaknesses in early taxes;
• three problems voters may overlook when legalizing marijuana;
• the specifics of 12 state legalization initiatives; and
• three potential post-enactment problems.

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VI. Summing Up

It’s unclear that marijuana taxes will stand the test of time. Legal commerce itself could fade away with a new administration. If for-profit marijuana commerce endures, some kind of marijuana taxes will too. The tax base march of progress is likely to continue. And the tax burden can go up too. The soundness of state marijuana taxes will depend on the ability of legislatures to dodge special interests and to make midcourse corrections. But state constitutions make some initiative-passed laws inherently inflexible. Like initiatives, legislation faces threats from medical tax breaks and reliance on flimsy price-based taxes.

Post-enactment, any tax scheme faces the threat of inadequate enforcement. Interstate commerce will threaten state producer taxes, and federal tax dominance could vitiate even the soundest state tax. Voters like marijuana revenue for government. But state marijuana tax laws are likely to remain works in progress for a long time.

NORML suggests 280E compromise

Internal Revenue Code section 280E is a Selling Expense Tax – denying income tax deductions for any amounts paid other than cost of goods sold.    It applies only to sales of federally illegal drugs.

So marijuana sellers cannot deduct, for instance, advertising expenses.

The marijuana consumer organization NORML says this as of March 19, 2021:

“NORML supports regulatory controls that seek to limit youth exposure to adult-use cannabis-related advertising and marketing as well as efforts to not incentivize advertising cannabis products through the tax code.” https://norml.org/marijuana/fact-sheets/core-attributes-of-adult-access-regulations/

(Note: The hotlink on “efforts” in that NORML statement links back to this web page.)

An earlier NORML posting pointed out that advertising  is a red flag for prohibitionists, and that maintaining non-deductibility of advertising costs can work against “well funded corporate controlled marijuana companies, which can afford extensive advertising.”

Here’s that full NORML statement, furnished by Political Director Justin Strekal, https://norml.org/about-norml/staff/, twitter @justinstrekal, about earlier legislation that had faded from view, but indicating NORML’s ongoing view of section 280E: 

“The marijuana industry is an economic generator for America. Businesses in this space should be regulated by the federal tax code in a manner that is fair, that will help stimulate economic growth, and that allows the marijuana industry and those who operate in it to avoid unjustified tax penalties.

“However, this legislation could be improved.

“As part of a potential compromise package to allow these deductions, NORML supports the continuation of non-tax-deductibility of marijuana business advertising expenses. For some citizens, advertising is a distraction, or can be a red flag that can cause them to hesitate to support the sound policy of legalization.

“Allowing deductions for rent and employee costs would help the bottom line of small businesses and give incentives for further hiring, while maintaining the non-deductibility of advertising costs can act as a preemptive move against well funded corporate controlled marijuana companies, which can afford extensive advertising. This development would encourage the proliferation of a more diverse array of smaller businesses, as opposed to the consolidation by large corporate interests. A legal industry dominated by smaller businesses in turn would create more competition, thus leading to higher quality and better priced products for the consumer.”

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Here is a link to article detailing some of the benefits of 280E. https://www.brookings.edu/blog/fixgov/2015/12/18/how-bob-dole-got-america-addicted-to-marijuana-taxes/#disqus_thread.

In support of the proposition that advertising helps big businesses more than Mom & Pops, $1 out of every $6 spent on restaurant advertising in America [in one recent year was] done by McDonald’s. https://www.businessinsider.com/this-one-statistic-shows-how-much-mcdonalds-tries-to-entrench-itself-in-everybodys-minds-2012-3.

TheHill.com piece on Repatriation Amnesty

Big business is holding US jobs hostage — Trump should not pay the ransom

BY PAT OGLESBY, OPINION CONTRIBUTOR – 02/01/17 10:00 AM EST http://thehill.com/blogs/pundits-blog/economy-budget/317227-big-business-is-holding-us-jobs-hostage-trump-should-not

 President Trump wants to create jobs. Global corporations want to trick him into giving them a tax cut. They are holding $2.5 trillion offshore. They’ll bring those trillions home and create jobs, they say. But first, America must give them a $500 billion tax windfall. No tax break, no jobs.

The president should have three problems with this repatriation tax amnesty:

It doesn’t work.
It sells out his base.
It rewards his enemies.

There is an easier way to “make America great again.” President Trump can make companies pay the tax without a tax cut, and then watch them bring the money home. Continue reading “TheHill.com piece on Repatriation Amnesty”

Estimating 280E revenue — data dump

This looks at 280E marijuana tax revenue.  Policy problems with 280E are discussed at the link.

There’s a lot more income tax compliance, regardless of 280E, from legal businesses than from illegal businesses.

For 280E, there’s a ton of guesswork, but a conservative answer is that 280E should be bringing in at least about $180 million this year. Less conservatively, double that.

There are two pieces of the puzzle:

  1. How much tax does 280E bring in on a typical sale?
  2. How big is the market? That is, what is the dollar value of sales?

Continue reading “Estimating 280E revenue — data dump”

Trump Shouldn’t Fall for Repatriation Amnesty

Full text is now at https://newrevenue.org/2017/02/11/5124/.

Here’s a new piece on Repatriation Tax Amnesty Windfall: http://thehill.com/blogs/pundits-blog/economy-budget/317227-big-business-is-holding-us-jobs-hostage-trump-should-not.

The publisher wants me to induce clicks, but here are rejected titles and the intro: 

How Trump Gets Jobs without Paying Tax Ransom
How Corporate America Demands $500 Billion Ransom to Create Jobs

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President Trump wants to create jobs.  Global corporations want to trick him into giving them a tax cut.  They are holding $2.5 trillion untaxed offshore.  They’ll bring those trillions home and create jobs, they say.  But first, America must give them a $500 billion tax windfall.  No tax break, no jobs.  The President should have three problems with this Repatriation Tax Amnesty:

It doesn’t work.
It mocks his base.
It rewards his enemies.

There is an easier way to “make American great again.”  President Trump can make companies pay the tax without a tax cut, and then watch them bring the money home.

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After 7 years of studying taxation of cannabis, I’m repeating myself a lot. So I’m taking a sabbatical, back to my earlier field of international tax.

Dr. Paul Gallis Joins New Revenue Board

I’m happy to announce that my friend and retired policy expert Paul Gallis, Ph.D., has joined the Board of Advisors of the Center for New Revenue. Paul’s unvarnished advice and punchy writing suggestions have helped me informally over the years. I’m delighted to have him agree to join this (still quite informal) Board.

Paul’s illustrious career is described in this Statement in the Congressional Record by Congressman John Tanner of Tennessee: https://www.gpo.gov/fdsys/pkg/CREC-2008-06-11/html/CREC-2008-06-11-pt1-PgE1200-2.htm Continue reading “Dr. Paul Gallis Joins New Revenue Board”