"Building a Better Marijuana Tax"

The title of this post is the title of this new paper recently posted to SSRN and authored by Carl Crow, a recent graduate of The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:

Eleven states and the District of Columbia have passed legislation legalizing adult possession and use of marijuana.  Of those twelve jurisdictions, only eight of those jurisdictions have active markets where the substance can be legally bought and sold, and each imposes a different taxation scheme on the flow of marijuana goods in the marketplace.  This paper analyzes each tax base and then proposes a bifurcated recreational marijuana tax scheme for states that are currently thinking about legalization: (i) tax flower, bud, and trim based on weight; and (ii) tax concentrates, edibles, oils, and other “distilled” marijuana products based on potency, currently measured by THC content.

The idea behind taxing by potency is two-fold: first, the state may pursue public health goals by nudging consumers away from high-potency forms of marijuana – and prevent producers from gravitating even more strongly toward high-potency goods; second, taxing by potency may help normalize the recreational use of marijuana by encouraging society to treat marijuana more like other legal drugs such as alcohol and cigarettes.  While no tax scheme is perfect, a hybrid weight/potency base combined with a sunset provision to allow further research on the area appears to be the ideal way to regulate marijuana at this moment in time.