{"id":17971,"date":"2019-09-20T01:25:51","date_gmt":"2019-09-20T01:25:51","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=17971"},"modified":"2019-09-21T02:21:16","modified_gmt":"2019-09-21T02:21:16","slug":"its-high-time-someone-studied-marijuana-taxes-so-we-did","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/its-high-time-someone-studied-marijuana-taxes-so-we-did\/","title":{"rendered":"It\u2019s high time someone studied marijuana taxes \u2013 so we did"},"content":{"rendered":"

Muhammad Salar Khan<\/a>, George Mason University<\/a><\/em><\/p>\n

Consumers don\u2019t seem to mind paying sales taxes<\/a> on things like food and clothing. Marijuana may be a different story.<\/p>\n

As marijuana taxes are imposed in more states<\/a>, many recreational marijuana users might cross interstate borders<\/a> to avoid them or even hoard stocks of weed<\/a> in anticipation of them. If state governments don\u2019t adjust to such behavior, it will reduce revenue and most likely increase overall marijuana consumption.<\/p>\n

Not many states have studied the implications of pot taxes on consumer behavior. So<\/a> we<\/a> did<\/a>.<\/p>\n

I\u2019m a Ph.D. student of public policy<\/a>, and my colleagues and I studied<\/a> data from marijuana users<\/a> in Oregon.<\/p>\n

We wanted to see what the economic consequences of marijuana taxes are on this billion-dollar industry<\/a>. Also, we wanted to help local governments to understand them \u2013 at a time when states are increasingly relying on these new sources of revenue to pay for education, health and law enforcement<\/a>.<\/p>\n

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Marijuana plants in Oregon.<\/span>
\nCC BY<\/a><\/span><\/figcaption><\/figure>\n

Changing consumer behavior<\/h2>\n

Although marijuana is considered a Schedule I controlled substance by the U.S. government, meaning the drug has a high potential for abuse<\/a> and is illegal to possess, 10 states and the District of Columbia<\/a> have legalized the possession or sale of recreational marijuana.<\/p>\n

As of 2019, 33 states have permitted medical<\/a> marijuana or decriminalized marijuana possession, and most Americans<\/a> support legalization.<\/p>\n

Each state with a legalized market has imposed a tax on marijuana transactions<\/a>. Starting on Jan. 4, 2016, Oregon officials levied a 25% tax<\/a> on recreational marijuana, which generated US$60.2 million in tax revenue<\/a> that year alone.<\/p>\n

Research suggests<\/a> that taxes \u2013 particularly taxes on substances or activities considered harmful<\/a>, such as gambling, alcoholic beverages or sugary soft drinks \u2013 alter consumer behavior.<\/p>\n

If consumers foresee tax changes, they may purchase and store large quantities before implementation of a tax. This may lower<\/a> overall revenue raised by the product temporarily until consumers use their stores.<\/p>\n

Cross-border purchasing is likely to be a more permanent issue regarding marijuana taxation, especially in states like Oregon, where large population centers are located near borders<\/a> of other states that have also legalized<\/a> marijuana sales \u2013 making it easy to avoid taxes with a quick road trip.<\/p>\n

Many people shifted to untaxed medical marijuana<\/a> immediately after marijuana legalization passed in Oregon<\/a> as you can see by the rise of medical marijuana applications post-taxation<\/a>. Medical marijuana patients may also buy untaxed marijuana for friends and family, further cutting into the revenue raised.<\/p>\n