“How Not to Tax Marijuana”

The title of this post is the headline of this effective new Huffington Post commentary by former congressional tax staffer Pat Oglesby.  Here are excerpts:

With marijuana legalization gaining steam, we might ask not just whether to legalize, but how.  Here are three tax mistakes that California and other states can still avoid.

Mistake 1.  Collecting late….

Mistake 2.  Taxing manipulable price….

Mistake 3.  Tying lawmakers’ hands….

What about this year’s crop of marijuana revenue proposals?  Some ace the test, avoiding late retail collections, price manipulation, and rigidity.  Bills in Maine, Maryland, New York, and Rhode Island — and an initiative in Alaska — tax at the wholesale level by weight, and don’t tie lawmakers’ hands.  That’s 3 for 3 right.  But the most prominent California initiative, The Control, Regulate and Tax Marijuana Act, would tax only at retail by percentage of price, and would freeze taxes through 2022. That gets everything wrong: 0 for 3.

We are just figuring out how to legalize marijuana.  Some legalization plans will work, but some won’t.  We can follow, adapt, or learn from models for tobacco and alcohol — which we’ve been forming and reforming since Colonial times.  That way, we can at least avoid making the same old mistakes over and over.  We’ll be making plenty of new ones.