A Principled Approach to Taxing Marijuana:BACK TO SQUARE ONE


One response to the above is to say, “Let’s get to work now paving the way for Congress to implement one of these clever tax strategies.” Others might instead say, “That’s a bridge too far. I just don’t trust Congress to pass a legalization bill that delivers dynamically adjusting taxes clever enough to prevent an alcohol-style legal marijuana industry from exploiting the compromised self-control of the minority of high-frequency users.”

Fortunately, the range of options is not limited to either just preserving the status quo or jumping all the way to an alcohol-style legalization. There are many intermediate options, including restricting production and sale to small, nonprofit co-ops whose charters obligate them to meet only existing demand and not to promote greater use.

My colleagues and I have written about such options elsewhere, but it is worth noting here one that preserves — indeed leverages — most of the character of the alcohol model while doing a much better job of protecting public health than any of the state models implemented to date.

The main reason for wanting to adjust taxes over time is to control prices. If Congress cannot delegate tax-rate-setting, perhaps it would be willing to delegate price-setting. Among the various ways to implement this would be following the dictum that “marijuana should be regulated like alcohol” in the sense of having three distinct tiers of producers, distributors, and retailers; in this case, a government agency would be the only authorized distributor.

That agency would be the sole buyer from a competitive, licensed, private industry of legal producers, and the sole seller to licensed retail outlets. If desired, the licensing could still be handled by the states, subject to minimum federal standards. (Some favor replacing brick-and-mortar retail stores with direct-mail-order delivery to customers; under that scheme, the government agency would be the sole seller to those individuals.)

The agency would be a monopolist and so could — with the guidance of a public-health board — adjust prices at will to strike a balance between minimizing the black market and minimizing abuse. It could adjust relative prices of different product forms, potencies, and the like, to nudge people toward safer forms. Indeed, when warranted it could more than nudge. For example, if a scientific advisory board concluded that butane hash-oil extracts posed unacceptable health risks that extraction with CO2 did not, it could sell only CO2-extraction products.

Likewise, the agency could set the wholesale price somewhat the way a public utility does, ensuring that producers earn a fair and reasonable profit — but not more. The net revenues from selling at much higher prices than producers are paid would produce revenue for the government just as taxes would, even though technically there would be no (federal) taxes.

Some might argue that government operations can be inefficient. This is true, but when the societal problem involves prices falling too low, inefficiency is not a paramount concern. Likewise, nervousness that government will overreach (also a valid concern) can be partially assuaged by noting that many experts on alcohol policy believe the “Nordic model” of state control leads to substantially lower rates of alcohol abuse than does the private-profit model.



“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"
Contact Us

Send us an email and we'll get back to you, asap.

Not readable? Change text.