Marijuana taxes: If they're too high, they'll empower black market, says task force member
In coverage of last week's final Amendment 64 task force meeting, our Charles Trowbridge noted that in addition to a recommendation about a 15 percent excise tax at the wholesale level, an idea about a 25 percent point-of-sale tax was also floated. Task force member Christian Sederberg stresses that the sales-tax notion wasn't an official recommendation, and he opposed its inclusion as a suggested option -- because he fears that if tax rates are too high, the underground pot market might continue to thrive.
Sederberg, who represented the Amendment 64 campaign on the task force, felt fine about the excise-tax recommendation.
"The amendment contemplated an excise tax of up to 15 percent," he points out. "So obviously, the drafters felt like such a tax would be acceptable up to the 15 percent level."
But, he adds, "additional taxes are where the real concern arises."
How so? "A sales tax burden added to the total tax burden of either the consumer or the producer/retailer could create a situation that empowers the underground market instead of reducing it," he believes.
He didn't keep this view to himself. "During the task force's last meeting, I spoke strongly against a 25 percent sales tax, or really any number, without there being a lot more information about where to strike that balance. And I referred to the end of alcohol prohibition and the approach taken by President Roosevelt and his team.
"Initially, their goal was to undercut the underground market, and then raise taxes when the time was appropriate at a later date."
This argument wound up being persuasive to some degree, since the task force as a whole didn't recommend a 25 percent sales tax. However, he goes on, "it became a dissenting opinion." The task force members who supported such a sales tax "wanted to incorporate it as a possible suggestion. I was against that, too: I thought it was inappropriate for us to come up with a number if we didn't have all the information we needed about how the number would impact underground markets and consumer prices. And the whole purpose of the amendment was to replace the underground market with a regulated market."
In the end, Sederberg says, "there was not a suggestion of a 25 percent sales tax. It was just an illustration included in the recommendation that a sales tax be considered."
Does that mean the Amendment 64 campaign will oppose any sales tax when the Colorado General Assembly tackles the chore of passing a law to enact the measure? No.
Continue for more about marijuana sales taxes and the Amendment 64 task force.