Thanks to editor Ben Adlin, who clarified some of my muddied thinking and made the piece much more readable: https://www.leafly.com/news/industry/opinion-theres-a-better-way-to-tax-legal-cannabis
Like it or not, most voters—not to mention politicians—like cannabis taxesbetter than they like cannabis itself. Cannabis consumers supposedly make up only about 20% of the public in fully legal states. The other 80% are bystanders, wondering, in the American capitalist way, “What’s in it for me?”
Not convinced? Consider: Initiatives to legalize and tax cannabis tend to max out at around 57% of the vote, if they pass at all. Standalone cannabis tax initiatives, meanwhile, routinely get 75% to 80%. And no state has legalized commercial sale of nonmedical cannabis without taxing it.
In evaluating the Tax Foundation’s views on taxes, it’s useful to know that the organization considers itself part of “the liberty movement.” To me, that indicates an aversion to taxation in general. That’s not un-American, but when the Tax Foundation criticizes a tax plan, that criticism might arise from a concern that the tax is too effective, and taking too much money from the private sector. See “States Should be Wary of ITEP Marijuana Tax Policy,” https://taxfoundation.org/itep-marijuana-tax-policy/. The original ITEP report, not tax-averse, is at https://itep.org/five-years-in-cannabis-tax-haul-rivals-or-exceeds-alcohol-taxes-in-many-states/.
The Tax Foundation’s support for taxing cannabis by price is based on its hope for low after-tax prices. Low prices are “a feature, not a bug, of legalization.” Sure, low prices help the fight against the black market, but cheap weed makes my public health friends nervous — because it low prices make it easier to get for kids and for the minority of consumers who overdo it. And taxes offset low pre-tax prices — and then there’s the revenue. Sure, revenue may not be declining in states with priced-based taxes, but it would be much higher with weight- or THC-based taxes.
The tweet below, indicating that working for the Tax Foundation is “a career in the liberty movement,” was retweeted by the Tax Foundation – an imprimatur.
Colorado de facto taxes cannabis bud now at 27 cents a gram, trim at 14 cents a gram, wet whole plants at 5 cents a gram, bud for extraction at 8 cents a gram, and trim for extraction at 6 cents a gram. Those rates apply to vertically integrated operations and related party transactions, where an actual arm’s-length transaction does not happen.
Those tax rates are 15 percent of the “Average Market Rate,” updated from time to time at https://www.colorado.gov/pacific/tax/marijuana-taxes-file: Continue reading Colorado’s Latest Per-Gram Tax Rates
Patrick Oglesby, former Congressional tax committee staff lawyer and founder of the Center for New Revenue, a North Carolina-based tax policy nonprofit, has been named to head a new IRS-Treasury Task Force on cannabis tax policy. IRS Chief Counsel W. Paul Wilkins said, “We welcome Pat back to government service. With marijuana legalization looming on the federal level, the executive branch needs to weigh in – and to have someone work with Congress to develop tax laws we can effectively and efficiently administer, including a marketing-focused substitute for 280E.” Continue reading IRS Opens Cannabis Tax Task Force
University of Texas-Arlington Professor Roger Meiners proposes a tax on robocalls in the Wall Street Journal. The rate would be one cent per call. To make it work without litigating which calls are unwanted, he would apply it to ALL calls. That’s simplicity over fairness.
He proposes: “Even a chatterbox who makes 50 calls a day would pay a mere $15 a month” for 1500 calls. That seems pretty doggone low.
Since we need to identify the phone that is making the calls, can’t we start the tax, like income tax, with a standard deduction per phone number? Give every number 1500 calls a month. So make 1500 calls or fewer, you owe no tax. For 1600, you owe $1 ((1600 -1500) x $.01) . That seems fairer — if it’s doable. Continue reading Tax on Robocalls — Making It Simple
How should taxpayers and the IRS treat logos under 280E?
A cannabis seller’s removable logo may leave the object to which it is affixed deductible. A non-removable logo, I’d guess not, but I’d welcome hearing the other side of the question.
Tax law so far has put little weight on the line between cost of goods sold and selling expenses. A singular exception is section 280E: Sellers of cannabis can deduct only cost of goods sold, so advertising and marketing expenses lose out. Plain packaging of cannabis is deductible, but how about packages with branding, or logos? Continue reading 280E and Logos
To replace a tax or fee on opioids, discussed here that has been ruled unconstitutional, Governor Cuomo’s New York budget proposes a straightforward opioid tax based on morphine milligram equivalents (MMEs):
The tax is would be a quarter of a cent ($.0025) per MME if wholesale the cost per MME is less than fifty cents ($.50).
The tax is would be a cent and a half ($.015) per MME if wholesale the cost per MME is greater than or equal to fifty cents.
So weak opioids would taxed less than strong ones. Can’t the user just take a lot of weak opioids and get the effect of one strong dose? Are opioid products so different that they merit discontinuous tax burdens? And why have a flat tax amount once a threshold is reached? Continue reading Does New York’s opioid tax idea make sense?