Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Wednesday, April 22, 2020

Student presentation on "Producing a Better Marijuana Tax Scheme"

Students in my Marijuana Law, Policy & Reform seminar are continuing to complete their presentations on research topics of their choice, and the second presentation slated for this week will focus on marijuana tax issues. Here is the student's description of his topic and some some "light" reading selected to help set the stage for his presentation.

In my paper, I set out to find a tax scheme that gives greater weight to the public health concerns of legalization while balancing the desire for revenue and fairness.  In doing so, I analyze the three primary tax bases that may be chosen by a legislature: (1) Price, (2) Weight, and (3) Potency, pausing a moment to describe just how complex the concept of marijuana "potency" really is.  In doing so, I lay out the benefits and disadvantages of each tax base and use Illinois' tax scheme to illustrate these pros and cons.  I also consider whether medical marijuana should be taxed on a separate scheme, exempted from tax, or treated the same as product intended for adult use.  Finally, I make a case for a hybrid tax base: tax flower and bud by weight, and edibles and concentrates by potency (as measured by THC). 

In making my case, I recognize that there is no perfect marijuana tax scheme.  The science is too young, marijuana is too complex a substance (both scientifically and by dint of being both "fun" and medicine), and these factors serve to amplify the push-pull between social goals, revenue, simplicity, and fairness inherent in any tax.  I have thus included in my proposal a five-year sunset provision that will force legislators to return to the table and incorporate new science (along with the previous five years of data what worked and did not work in the original law) and hopefully produce a better tax scheme.

BOTEC Analysis LLC, Cannabis Potency Tax Feasibility Study (Oct 2019)

NPR, Highly Potent Weed Has Swept The Market, Raising Concerns About Health Risks (May 2019)

BOTEC Analysis Corp., Testing for Psychoactive Agents (Aug 2013)

Tax Foundation, How High Are Recreational Marijuana Taxes in Your State? (Apr 2019)

Pat Oglesby, Laws to Tax Marijuana (How To Tax It) (June 2012)

https://lawprofessors.typepad.com/marijuana_law/2020/04/student-presentation-on-producing-a-better-marijuana-tax-scheme.html

Assembled readings on specific topics, Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Taxation information and issues | Permalink

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