USA: Weed Tax Unreliable

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Taxes on cannabis, gambling are unreliable, study says

by DALE DENWALT: July 22, 2018

As Oklahoma prepares to collect taxes on marijuana, a new study from the Pew Charitable Trusts urges caution when relying too much on that money.

The report released Thursday highlights the history of “sin taxes,” or revenue collected from things like marijuana, gambling, tobacco and alcohol.

“Sin taxes can provide short-term revenue boosts, but because of a combination of factors, they may also drive budget challenges in the long term,” said Mary Murphy, project director for Pew’s state fiscal policy division. “And relied on for ongoing commitments, (they) can create structural budget challenges.”

State Question 788 set the tax on medical marijuana at 7 percent, which will be collected at the retail level based on the amount of money a customer spends. Other states tax product at the warehouse, and others set levies based on potency or the quantity of marijuana sold.

Tax revenue will first be used to regulate the industry. If there is a surplus of funds, 75 percent of it would be earmarked for public education and 25 percent will go to Oklahoma State Department of Health for drug and alcohol rehabilitation programs.

“Earmarking some of this revenue for specific purposes can prevent some of these volatile revenues from being baked into general fund spending. On the other hand, earmarks have their own challenges associated with them,” Murphy said.

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