The Center for New Revenue

From golocalprov.com:  Pat Oglesby, the Founder of the Center for New Revenue who recently weighed in on the Colorado taxation scenario for the Huffington Post, addressed legalization — and revenue — with GoLocal.

“After legalization, pre-tax prices of legal marijuana are likely to be lower than current black market prices,” Continue reading “Marijuana Revenue in Rhode Island”

Here’s the original joke from the public domain:

In the small villages of eastern Europe, the rabbi was the undisputed leader Continue reading “Rabbi Joke Applied to Marijuana Taxation”

Thanks to Huffington Post for publishing this.  It’s just about the wholesale level tax, and ignores the retail level tax that also passed Tuesday.  And the low rates.  One thing at a time.

Over 500 groups, including the  NC Center for New Revenue, have signed a letter urging Congressional action to close offshore corporate loopholes and stop tax haven abuse.  Wish us luck.

As a base for a marijuana tax, percentage of price has an apparent advantage of seeming reasonable on its face in some cases — that’s what I heard a lot at the Drug Policy Alliance conference in Denver.  That is, an objection to a weight base (in addition to “it encourages high potency”) is that a series of three 25-percent excise taxes like those in Washington state’s law may seem reasonable, and a tax of say $50 an ounce might seem so outrageously high as to be unenforceable.  We don’t tax anything at $50 an ounce. Continue reading “Marijuana tax base: Grams?”

Left to right:  Jorge Hernandez Tinajero, President, Collective for an Integral Drug Policy, Mexico City, Mexico; Steve Rolles, Senior Policy Analyst, Transform, Bristol, England;  Beau Kilmer, Co-Director of RAND Drug Policy Research Center, Santa Monica, CA; me; Congressman Julio Bango, Represente National at Parlamento Uruguayo, Montevideo, Uruguay; Sam Kamin, Director, Constitutional Rights & Remedies Program and Professor, Sturm College of Law, University of Denver, Denver, CO;  Dick Reinking, Senior Policy Advisor, Gemeente Utrecht, The Netherlands.  Not pictured:  Moderator Graham Boyd, Counsel to Peter Lewis, Santa Cruz, CA.

This session took place Thursday, October 24, in Denver, at the biennial conference of the Drug Policy Alliance.  I indicated that I thought taxes in CO and WA were maybe unavoidably wrong by having static rates, probably wrong by using a percentage of price base, and nearly certainly wrong to the extent they collected tax later than the choke point (punto de embudo — we had simultaneous interpretation).  I learned a lot from the rest of the panel — different from my days with Congress, when most panels consisted of all tax lawyers, and the occasional relief came from a tax accountant or tax economist.

It turns out that my friend and former teacher  Bill Turnier of UNC-CH Law School (whose Family Wealth Management course I helped him teach) looked at marijuana and taxes a while back.  He wrote “The Pink Panther Meets the Grim Reaper: The Estate Taxation of the Fruits of Crime,” in 72 N.C.L. Rev. 163.  The article deals with the valuation of contraband.

Every day I learn something new.  Or remember something I used to know.

That’s the message of Professor Douglas A. Berman of Ohio State Law School, who is teaching a seminar and hosting a blog on marijuana law.  Yes.  Please.  Joel Newman of Wake Forest (280E), Ed Roche of Denver (280E), and Ben Leff of American (501(c)(4)) are the only Law School professors who’ve written anything I’ve found.  There is a lot of thinking that needs to be done.

UPDATE:  Taxprof is on it, too, along with State Tax Notes.

Huffington Post just published a moderate and easy piece I wrote here.

Full link spelled out is: http://www.huffingtonpost.com/pat-oglesby/marijuana-tax_b_4128102.html

Marijuana prices were low before legalization opened the door to economies of scale.   John Prine described prices this way: “You may see me tonight with an illegal smile.  It don’t cost very much, and it lasts a long while.”  Mark Kleiman tells how they will get even lower.

Examples of excise taxes based on percentage of price keep turning up.  Here’s a list: Continue reading “The Federal Tax on Cigars, and Other Price-Based Excises”

Price, weight, potency:  Those are the leading options for a tax base for marijuana.

Potency won’t work for taxing plant material (smokable marijuana), because it’s not fungible (homogeneous) enough to yield replicable test results.  Accuracy within 10 or 20 percent is not “close enough for government work.”  If my W-2 or 1099 IRS form is 20 percent too low, I’ll be smiling;  if it’s 20 percent too high, I’ll be trying to figure out how to appeal — or how to find a different measurer (the analog of testing lab) next time.

But “concentrated cannabis oils, known in various states as ‘butter’, ‘shatter’, ‘wax’, and ‘BHO’” – are fungible enough to yield replicable THC results – close enough for government work, indeed.

But then it turns out that concentrates have two uses:  for smoking and for edibles.  Smoking concentrates may be the most intoxicating form of consumption.  But when concentrates are incorporated into edibles, they lose potency.

There’s a dilemma.  If intoxication is the basis Continue reading “Taxing Marijuana: Dabs and Edibles”

Treaties are no more sure to be right than statutes. A democracy needs to have laws that suit the people, so being able to get out of treaties is what the Founders had in mind when they put treaties on a par with statutes. http://en.wikipedia.org/wiki/Article_Six_of_the_United_States_Constitution

But treaties are confusing — a thicket. Some countries’ internal laws do make treaties superior, so their hands are tied. But ours aren’t. This infuriates countries like the Netherlands, France, Switzerland, Japan, and Belgium, which are utterly stuck. http://www.asil.org/ajil/v86310.pdf, p.320.

[UPDATE April 2016: That was a bad link. Here is a better one:

“There is also significant variation among monist states concerning the hierarchical rank of treaties within the domestic legal order. In Austria, Egypt, Germany, and the United States, treaties are equivalent to statutes; they rank lower than the Constitution.79 In South Africa, treaties rank lower than statutes.80 In China, France, Japan, Mexico, and Poland, (at least some) treaties rank higher than statutes but lower than the Constitution.81 In the Netherlands, some treaties rank higher than the Constitution.82 In Chile, Russia and Switzerland, the hierarchical rank of treaties is contested, but it is undisputed that at least some treaties rank higher than statutes,83 and there is some authority for the proposition that some treaties have constitutional rank.84” http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1620&context=facpubs.]

So it irritates them when we use the Founders’ rule. Understandably.

Here is an article looking way back to the Founders, and pointing out that in recent years, “the United States has drawn international criticism for overriding bilateral tax treaty obligations through changes to its tax laws.”

So as not to rub it in, Congress uses the word “override” when the time comes.  Not violate, not breach, not abrogate.   See  Tax Treaty Overrides: A Qualified Defense of US Practice.

 

 

They are giving the stuff away in Colorado.  Clearer proof of the inadequacy of a percentage of price tax base for marijuana would be hard to find.  If the price (the tax base) is zero, the tax rate doesn’t matter.  Of federal taxes on tobacco or alcohol, only the cigar tax uses (in part) a price base.  But all the marijuana taxes so far do.  We have a long way to go. Continue reading “Tax Base for Marijuana: Price Fails”

Activists in Colorado are lining up to oppose a referendum that would tax recently legalized marijuana there for the first time.  The DC-based head of NORML has a more realistic view: Continue reading “Marijuana Tax: Activists Think Wishfully”

The marijuana industry is lining up anti-tax leader Grover Norquist and pro-legalization Democrats to support repeal of Code section 280E, says Roll Call.  I kind of like 280E because it discourages marketing of marijuana, as I wrote for Huffington Post.  And we need a federal tax on marijuana. Continue reading “280E Marijuana tax: The center may hold”

By Marty Sullivan, in Tax Notes — both top names in tax policy writing.  He is quite sympathetic to base broadening; he analyzes the law and the politics.  Highly recommended for North Carolina readers interested in the story of House Bill 998.