A Principled Approach to Taxing Marijuana:A FUNCTIONAL REPLACEMENT

A FUNCTIONAL REPLACEMENT

If marijuana is legalized nationally, tax rates will have to be set nationally; gray-market arbitrage will undercut any substantial taxes imposed by states or localities. Production costs will fall sharply, and the public interest requires minimum after-tax prices that are reasonably stable. Therefore, if supply is left entirely to for-profit enterprise, tax rates must increase substantially over time. Other aspects — such as the equivalence rates between flowers and extracts — will also need to be adjusted in response to changes in market conditions and improved understanding of health risks.

Unfortunately, Congress may be too focused on fundraising and too vulnerable to industry lobbying to be trusted to implement such dynamic, evidence-based adjustments. There are at least two ways to work around this: delegating tax-rate-setting to an independent agency, and launching legalization with a schedule of tax increases that are clearly too large, so that all adjustments will be in the downward direction. Additional strategies undoubtedly exist, but none have a proven track record.

Fortunately, the choices are not limited to continued prohibition or hoping that Congress will suddenly become innovative and principled enough to prioritize public health over corporate profits (and campaign contributions). Besides more cautious approaches, such as restricting the privilege of supplying legal marijuana to nonprofit organizations, there is also the option of inserting a government monopoly between the producers and the retailers that could set prices directly.

Giving the government a prominent role in price-setting is distasteful for myriad reasons. But the federal government adopting the legalization model being pursued by the states would be even worse.

Marijuana is not an ordinary commodity, and the lifting of prohibition demands the creation of some mechanism for nudging against certain consumers making bad choices, even if that inconveniences the (politically more powerful) majority of users whose consumption is relatively harmless.

It is important for the public to engage on these issues now. The 2003 invasion of Iraq showed that it is sometimes easier to topple the old regime than to craft a well-functioning replacement. Marijuana prohibition is tottering, and procrastinating on doing the hard work of thinking through tax principles will more or less ensure a bad replacement.

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“If you can't figure it out, figure out a "work-around!" The NestEggg Group was founded with a firm belief that working exclusively with professional firms to help them see past their history into the potential of their futures. Your potential is limited only by your creativity. Jeff's business purpose— “why”—centers on changing results through viewing things in new ways. He expounds: “Changing our results requires changing our actions. Because what we do proves what we believe, only when we change our beliefs can we progress. New insights are what cause us to shift our beliefs.” So what results do you want to attain? Call Jeffrey (1-888-987-NEST) when it’s time for progress. About Robert "Jeffrey" Wolter, President The NestEggg Group, Inc & EgggsAct Tax, Inc. & Managing Member NestEggg Investment Advisors Jeffrey is a common sense and productivity strategist. He facilitates and teaches about growth, positioning, and pricing strategies; leadership; operations; business communications and philanthropy. What he does best—differently from others—is energize people while he shows them how to solve business effectiveness. He clarifies the intricate, huts new light. He encourages hope. He sets you up to make development possible. Jeffrey is recognized for his original ideas and success with practical implementation, even as he challenges the "norm". Jeffery is a skilled facilitator. His deep knowledge of his firm(s) operations and ability to understand the intricacies of All of his clients, gives way to sharp observation skills allow his grasp a firm’s nuances quickly. He then guides firm owners and their teams on their unique paths toward improved profitability, smoother operations, stronger cultures and how and when to give back. Since 1998, he's helped more than 5,024 QuickBooks users and business owners achieve results such as: expanding revenues, attracting and inspiring talent, aligning operations with long-term objectives, discovering and leveraging their differentiation, substantially increasing sales and proposal results, strengthening relationships with their clients, and finding more joy in their work. His 25+ year career background includes roles as entrepreneur, finance director, board of director for several nonprofit, creative business development, insurances agency owner, Wealth Management Firm owner, editor, Tax Specialist, Accounting Director, Mediator and more. Before creating his firm in 2007, Jeffrey was an accountant for several well know local firms and individuals. After building a successful accounting practice, he became intrigued and inspired by the uniqueness of how Insurance, Investment's/Wealth Management, Taxes and Accounting/Bookkeeping all tend to work together, he branched out and created his list of Affiliate Companies in 2012 & 2013 In 2013, joined the Intuit Accountants Council and has assisted in the continued enhancement of the popular QuickBooks (Desktop and Online versions) and did so until late 2015. In 2014 with the legalization of Marijuana, Jeff and his team have committed themselves to knowing as much about the industry and being there to offer Cannabis Compliant, Accounting, Tax & Insurance to business owners that have or need help in keeping in with the Federal government's "280E"
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