On the eve of another huge election for cannabis, the experts at the Tax Foundation talked with L.A. Weekly about their look at the potential value of each new cannabis market to states’ coffers.
Ulrik Boesen is a senior policy analyst with the Center for State Tax Policy at the Tax Foundation. He recently highlighted his continued concerns over states relying on excise tax models for cannabis while taking a look at the potential tax for each state with legal cannabis sales on the ballot.
Boesen argues while there are legitimate reasons for levying excise taxes on marijuana, legislatures and voters should proceed with caution.
“Due to their narrow base, excise taxes are not a sustainable source of revenue for general spending priorities. That is not to say that there is no new revenue available to states that choose to legalize. Beyond the general sales tax, legal marijuana businesses would also pay business taxes, and employees would pay personal income taxes,” Boesen said in his analysis. “Revenue from these broad-based taxes, combined with a potential saving as illicit operations decline, does represent general fund revenue. Expecting a large and sustained boost from marijuana-specific taxes, however, is shortsighted and represents poor tax policy.”
Even for an expert like him, it can actually be tricky to follow all the dollars cannabis is providing to state economies. Boesen said when he looked at these cannabis tax numbers he wasn’t always sure of the exact makeup.
“I looked at Washington state recently and I couldn’t tell if the cannabis number was sales and excise and gross receipts taxes, and you know income taxes from people who work in the dispensaries and property taxes from the dispensaries in corporate income tax. If that was all included there or if it was some of them,” Boesen told