Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Saturday, June 30, 2018

"Marijuana Revenue Competition — Look Out Below"

The title of this post is the title of this short new paper authored by Pat Oglesby now available via SSRN. Here is its abstract:

Beyond the ever-present illegal market, a more subtle threat to marijuana revenue lurks: Tax competitors (think: tax havens) threaten subnational jurisdictions that can’t or don’t control their borders.

This article presents a framework for looking at threats to marijuana revenue:

1.  The illegal market can be marginalized by law enforcement or low taxes.

2.  Only low taxes can defeat legal tax competitors.

3.  Tax competition threatens local retail taxes more than state retail taxes.

4.  Tax competition threatens local producer taxes much more than state producer taxes.

5.  Federal legalization would ipso facto expose state taxes to daunting competition.

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