The Center for New Revenue

This document freezes producer marijuana taxes through the end of 2014: Average market rate late 2014.

These bills sometimes disappear. Here is the text of New York State Senator Liz Krueger’s bill imposing “an excise tax of $50.00 per ounce on marihuana and $50.00 per quarter ounce of concentrated cannabis.”  http://open.nysenate.gov/legislation/bill/S6005-2013 Accessed 14 September, 2014.

BILL NUMBER:S6005 Continue reading “NY bill: bud $50/oz.; concentrates $200/oz.”

Several posts here have looked at whether taxing bud at one rate and trim at another is viable.

One argument that the line is self-enforcing, as bud is smoked and trim made into concentrates.   But even without a tax incentive to put bud in the trim pile, businesses do just that.  Here is an ad, downloaded 14 September 2014, promising concentrates made from . . . ALL BUD NO TRIM!

 

 

 

Colorado just avoided a 50-percent hike in the rate of tax on flowers or bud, from 62 cents a gram to 95 cents.  An administrative tax increase was squarely on the table, put there by a finding of fact by Colorado’s Marijuana Policy Group.  But the Department of Revenue rejected that finding and held rates steady.

Continue reading “Colorado freezes marijuana tax rates”

This is an October 30, 2014, update, of a mid-August post:

Rates of $35 an ounce for potent flowers, $10 an ounce for less potent leaves, and $5 per immature plant: Those are the tax rates in Oregon’s Measure 91, which recently qualified for the November 2014 ballot. A reader asks: Are they too high? Are they too low? And how about the rate of $50 per ounce, reducible by regulations for (presumably less potent) parts of the plant, in Alaska’s Ballot Measure 2 (http://ballotpedia.org/Alaska_Marijuana_Legalization,_Ballot_Measure_2_(2014),_Full_text_of_initiative)?  I’ll answer a different question.  Alaska has an advantage other western states is that its internal laws don’t freeze voter-passed tax laws.  Oregon’s law gives no advantage to voter-passed laws, and its 3/5 supermajority requirement for tax increases is less burdensome than some states’ rules.

How about those rates?  To beat around the bush, the three hardest words in the English, according to Think Like a Freak, provide my answer. (Digressing further, the authors of that book, and of Freakonomics, feature my friend and Center for New Revenue board member Joe Murphy here: http://freakonomics.com/2012/12/06/the-things-they-taught-me-full-transcript/.) Continue reading “Marijuna tax rates in Oregon and Alaska”

Laws To Tax Marijuana — published version in State Tax Notes is the official version, but State Tax Notes would not print a Table of Contents, which is available in Laws To Tax Marijuana — Manuscript with Table of Contents.

The Federation of Tax Administrators, http://www.taxadmin.org/fta/about/default.html, folks who administer and collect state taxes, are having me on a panel about marijuana taxes for their Tobacco Tax section, in Knoxville, August 18.  Final slides are at FINAL Oglesby FTA Tobacco section aug 18 noon slides for Knoxville.

A sin tax is “a sumptuary tax specifically enforced on a good which is addictive, self-destructive, and socially undesirable while raising revenue for pro-social activities.”  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2461189

My old friend and former Joint Committee on Taxation Foreign Team colleague Patrick Driessen, no longer on staff, emails:

“I just congratulated a former JCT attorney for assisting on an inversion.  I told him that, notwithstanding what Secretary Lew just said, anybody helping to complete an inversion IS being a real patriot, on the theory that If we only have 10 more inversions this year, then we get something like the Levin bill which is at best a 7874 bandaid.  But if we get 25 more inversions this year, people will start looking at formulary and tell the lawyers to find a new sacred cow — other than transfer pricing, and with 50 more inversions this year, we get what I really want, which is to abolish the corporate tax, raise the individual income tax rates at the top, put in a VAT with a demogrant, and tighten the estate and gift tax (including policing the many phony self-glorifying foundations out there).  Continue reading “Helping “deserters” is patriotic?”

Oregon marijuana tax revenue would amount to $38.5 million in year 1, says ECONorthwest.  The work was paid for by proponents, but I don’t detect bias.

The estimate assumes

— no movement from medical to recreational (because of low taxes, high medical fees).

— 60 percent market share for black/gray market after legalization. If law enforcement steps up, that number should go down over time.

— Big impact of 280E on growers (but that’s unrealistic, since nearly all growers’ expenses are deductible cost of goods sold; 280E hurts retailers much, much more – it hits anyone who does marketing or has a showroom).

— Steady prices during the first two years of legalization (after a minor initial drop). I would think prices would start dropping pronto.  But they might spike at first, as they have in CO and WA, though Oregon aims at creating more lead time to get supply ready.

 

Tax has been called the “Swiss Army Knife of public policy.”  In the two states where recreational marijuana is legal, medical marijuana patients don’t pay tax on what they buy.  That’s one way of providing relief to sick people.  Berkeley, California, is considering another way.  The New York Times reports:  “marijuana dispensaries will have to set aside 2 percent of their product — which must be of equivalent quality to the marijuana they’re selling at market prices — and give it free to city residents with incomes below $32,000.” Continue reading “Beyond the Swiss Army Knife for medical marijuana”

I can’t understand the figures for sales of recreational marijuana in Colorado in April, the fourth month below:  How could 10 percent of marijuana sales be greater than 2.9 percent of all sales?  I’ve asked the Department of Revenue for help in understanding what is going on.  All figures come from links on http://www.colorado.gov/cs/Satellite/Revenue-Main/XRM/1251633259746. Continue reading “Confusion over Colorado marijuana taxes”

A quick look at Craigslist for Denver,  http://denver.craigslist.org/search/sss?query=free+marijuana, searching for free marijuana, shows (along with free delivery and other non-tax-motivated offers) several deals where the purchaser who buys some non-marijuana item gets a certain amount marijuana free.  Does that avoid the 10 percent retail tax on marijuana?  I wouldn’t be surprised to see taxpayers take the position that no tax is owed.

 

In January, recreational marijuana stores in Colorado sold just north of $350,000 worth of stuff that did not bear the 10-percent marijuana tax.  The math is explained here.   By May, that figure had more than quadrupled, to over $1.4 million. Continue reading “Sales of non-marijuana items in Colorado recreational stores quadruple”

It looks to me like sales of non-marijuana items in recreational stores have risen from 2.5 percent in January to 6.5 percent in May.

Hmm.  Does that mean stores are “bundling” normally taxable marijuana with free-of-10%-tax vaporizers or something?  For instance, buy an untaxed vaporizer, get your marijuana free as part of the vaporizer price?  I have no idea, but there is an incentive to do that — if taxpayers think that works.  As an old friend from the Joint Committee staff used to put it, the job of the tax lawyer is to turn This into That.

Folks in Colorado know a lot more than I do.

Details here.

My mistake:  I thought I could figure out the ratio of recreational marijuana sales to medical marijuana sales in Colorado (and gross sales) by comparing sales tax figures.  Both bear the same 2.9 percent sales tax, so I took sales taxes reported by recreational businesses and divided by .029 to get total recreational sales.  Then I did the same for medical marijuana businesses (which report separately in Colorado).

Not so fast!  Professional journalists got this right.  It turns out that those sales taxes cover not just marijuana, but everything sold in the stores – pipes, papers, T-shirts, trinkets, you name it.  (Thanks to Natriece Bryant of the Colorado Department of Revenue for confirming that treatment.)

It’s easy to calculate sales of recreational marijuana:  take the 10-percent retail tax reported by the State, and multiply it by 10 (divide it by .10).  (I thought my 2.9 percent method was close enough, and had the advantage of comparing recreational and medical marijuana sales directly.)

Getting it right alerted me to a phenomenon:  In January, only 2.5 percent of sales of recreational marijuana stores were accounted for by non-marijuana items (pipes and so on).   By May, that figure had risen to 6.5 percent.

Here are the figures: Continue reading “Calculating Colorado marijuana sales”

When Prohibition was repealed, the federal government was deluged with applications to import liquor.  Granting quotas to all applicants seemed likely to create a situation where “nobody would have got enough to do business with.”

There are various ways of dealing with excess applicants, like holding a lottery, as Washington state is doing; selling licenses to the high bidder; or, as the Roosevelt Administration did in 1933, considering each application on its merits and deciding yes or no for each application.  Here are details, with highlights bolded, stated by the head of the Federal Alcohol Control Administration: Continue reading “Quotas for intoxicant businesses in 1933”