Best Marijuana Taxes Yet: California's Proposition 64

Abstract

Two devastating traps threaten taxes on newly legalized marijuana.

One is the quicksand of inflexibility, leading to impotence during a whirlwind of market change. Static laws and price-based taxes lead into that trap.

The trap other is playing favorites by favoring medical users, opening an abyss of tax evasion by recreational users pretending to be sick.

California’s Proposition 64, on the ballot in November, avoids those traps better than the marijuana initiatives in Arizona, Massachusetts, Maine, and Nevada.

It takes lessons from failed initiatives in California, Ohio, and Oregon, and laws on the books in Alaska, Colorado, Oregon, and Washington.

Keywords: Tax, Excise, Marijuana

JEL Classification: H2