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Congressional Research Service Report on Possibility of Taxing Legal Marijuana

By: Friday November 21, 2014 7:32 am

Vintage Marijuana Tax Stamps

If you want insight into how Congress might eventually treat marijuana when it is finally legalized at the federal level, you should read this new Congressional Research Service report on possible options for taxing cannabis. The service prepared this report at the request of members of Congress.

The report looks at not only the potential revenue that could be gained from marijuana, but also the pros and cons of the multiple ways marijuana can be taxed such as: by weight, by price, by THC content, and/or special occupational taxes on businesses.

I personally found this section interesting because it gets to the heart of a question I recently asked: what price should marijuana be sold for? From the report:

Economic theory suggests the efficient level of taxation is equal to marijuana’s external cost to society. Studies conducted in the United Kingdom (UK) and Canada suggest that the costs of individual marijuana consumption to society are between 12% and 28% of the costs of an individual alcohol user, and total social costs are even lower after accounting for the smaller number of marijuana users in society. Based on an economic estimate of $30 billion of net external costs for alcohol, the result is an external cost of $0.5 billion to $1.6 billion annually for marijuana. These calculations imply that an upper limit to the economically efficient tax rate could be $0.30 per marijuana cigarette (containing an average of one half of a gram of marijuana) or $16.80 per ounce. An increased number of users in a legal market would raise total costs, but not necessarily costs per unit.

Their research implies that a tax of $16.80 per ounce would potentially cover the negative social cost of legal marijuana use, but with all things related to marijuana research there are still many unknowns thanks in part to its decades of criminalization.

Of course achieving the economically efficient tax rate is often not the main goal of policy makers. Excise taxes are often used primarily to raise revenue or discourage use.

Jon Walker is the author of After Legalization: Understanding the future of marijuana policy on sale for just $0.99

The Unexpected Way Local Marijuana Taxes Can Impact Public Health

By: Wednesday November 19, 2014 10:33 am

Now that voters in Oregon have legalized marijuana one of the big policy fights is whether or not to allow cities to adopt their own local marijuana taxes. It is one of the hundreds of regulatory decisions each state is going to need to make as they move forward with marijuana reform.

Supporters of local taxes believe it is a matter of local control and say cities will need the extra money for dealing with implementing legalization. Opponents point to the fact that people voted for an initiative calling for a standardized marijuana tax throughout the entire state, and that high local taxes could undermine the goal of eliminating the black market.

What I haven’t seen mentioned so far is the impact it can have on driving. While we rarely ever talk about the impact on driving when discussing policy changes that aren’t directly about transportation, we really should. Driving is one of the most dangerous and destructive things average people do on a regular basis.

In 2012, 33,561 people died in the United States directly because of motor vehicle accidents and 2,362,000 people were injured. Cars are also a major source of air pollution and greenhouse gases. One study found emissions from road transportation may cause 53,000 premature deaths a year. In addition when people drive instead of walk it has negative consequences for their health.

If tax rates vary from city to city some people are going to drive to the next town to get a better deal. How much extra driving that could cause would depend on a huge number of unknowns, but purely for the sake of an illustration let’s assume a third of Oregon’s projected recreational consumers would choose to always drive to stores an average of 15 miles further away to save on taxes. That could result in 100 million more miles driven during the first three years. Based on national averages that should translate to about one extra traffic death and 80 injuries. It would also release about 40,000 metric tons of carbon dioxide. A modest but real downside.

We should keep it in mind these related impacts, given that there are alternatives. For example if most cities honestly believe the current tax structure is not going to provid them with enough money to deal with legalization, the state could instead slightly increase the state excise tax and give all the extra money to localities with marijuana stores. That would do a better job of raising money, since it won’t be as easy to avoid as a patchwork of local taxes, and won’t encourage extra driving.

Overwhelming Support for Change to New York City’s Racist Marijuana Policy

By: Wednesday November 19, 2014 6:17 am

Ending the racist and often illegal way the New York City police have abused the marijuana possession laws enjoys overwhelming support.

According to Quinnipiac polling, 71 percent of New York City voters support “Mayor de Blasio’s decision to decriminalize possession of small amounts of marijuana, so that people found to be carrying small amounts of marijuana could get a summons, similar to a traffic ticket, rather than being arrested.” Only 26 percent of voters in the city oppose the policy change.

The poll also found that 70 percent of voters don’t think this change will increase crime in New York City.

It is worth pointing out that de Blasio didn’t “decriminalize” marijuana possession in New York City. He just decided to make the New York City Police finally start actually following the law.

Marijuana possession in New York state has been decriminalization for over 30 years. The problem was New York City Police were tricking people, stretching the law, or even outright lying to claim the marijuana they found was in “public view.” This exploited a loophole in the state law which defines only marijuana in public view as a misdemeanor. These highly questionable tactics were used almost exclusively in parts of the city that are predominately Black or Hispanic.

Attorney General of California Calls Legalization Inevitable

By: Tuesday November 18, 2014 11:25 am

In another positive sign of how quickly the debate around marijuana reform is shifting, California Attorney General Kamala Harris now thinks marijuana legalization in her state is inevitable. From Buzzfeed:
Hog's Breath, Sativa-2

“I am not opposed to the legalization of marijuana. I’m the top cop, and so I have to look at it from a law enforcement perspective and a public safety perspective,” Harris told BuzzFeed News in an interview in Washington, D.C. “I think we are fortunate to have Colorado and Washington be in front of us on this and figuring out the details of what it looks like when it’s legalized.”

“We’re watching it happen right before our eyes in Colorado and Washington. I don’t think it’s gonna take too long to figure this out,” Harris said. “I think there’s a certain inevitability about it.”

The national marijuana reform groups have already proved they have the desire, knowledge, infrastructure, money, and public support to spread marijuana legalization with ballot initiatives. It is not a matter of if legalization is coming to California, just a when and how.

I hope state politicians will see that it is inevitable and decide to proactively work to bring about legalization in the most sensible way possible. The ballot initiative is a blunt and imperfect tool for dealing with complex regulatory issues. This is especially true in California because its unique, strong anti-legislative tamper rules can make small problems a pain to fix.

Sadly, at the moment it seems unlikely the California legislature will move forward on their own legalization bill, so a 2016 ballot initiative campaign will be necessary. I at least hope this means officials like Harris will do some of the preemptive groundwork to allow for a smooth implementation when the time comes.

Jon Walker is the author of After Legalization: Understanding the future of marijuana policy on sale for just $0.99

Eric Holder’s Pathetic Reason for Continuing to Shirk His Responsibility on Marijuana Rescheduling

By: Monday November 17, 2014 11:00 am

Even though Attorney General Eric Holder has both the power and duty to reschedule any drug based on the latest science, he continues to to claim rescheduling marijuana should be left to Congress. From an interview on The Marshall Project:

[Holder:] I think the question of how these drugs get scheduled and how they are ultimately treated is something for Congress to work on. I think we’ve pushed. We have done an awful lot. You look at what’s going on now in COLORADO AND WASHINGTON5 and the way we’ve dealt with those initiatives, identifying the EIGHT PRIORITY AREAS6 that we thought still would warrant federal involvement, and yet if you look at where we are now with those states and with what other states are doing, and the way we view the whole issue of the use of medical marijuana, we’re in a fundamentally different place than we were when Barack Obama became president and I became attorney general.

So I think we’ve made significant progress in looking at that drug in a more realistic way. But I think our society has to ask itself the question of how ultimately we are going to view the use of marijuana.

It is disappointing that Holder’s only justification for not using his power to reschedule marijuana is not based on facts or data, but purely some vague concern about political sensitivity and perception of overreach. It is also pathetic given how silly and misguided these political considerations seem to be.

Holder moving marijuana to a lower schedule would be perfectly in line with public research, precedent, current law and political norms. Our system traditionally doesn’t treat the rescheduling of drugs as a job for Congress. The vast majority of drug rescheduling is done by the executive branch and marijuana should be no different. For example when the administration made the big decision to move hydrocodone combinations from schedule III to II, they didn’t go to Congress but instead did it on their own.

There is also no reason to believe rescheduling marijuana would upset the general public or Congress. The American public overwhelmingly wants the government to acknowledge medical marijuana and earlier this year a majority of the members of the House of Representatives voted in favor of two big provisions meant to help state approved medical marijuana programs

It is just mind boggling that while the Obama administration is looking at ways to stretch their legal authority to use executive actions to get around Congress on issues, like the environment and immigration, they would still refuse to move forward on the one issue where they are so explicitly given the power to act under current law.

Jon Walker is the author of After Legalization: Understanding the future of marijuana policy on sale for just $0.99


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