A Toke and a Tax

Jeremy Singer-Vine examines the debate over legalizing and taxing marijuana to bolster struggling state budgets. California and Illinois are warming up to the idea, and marijuana reform advocates agree that taxation is fine, but the details of how exactly such a revenue stream could and would function remain hazy:

Tax debates often get heated, but a marijuana tax is particularly divisive because it's so speculative. (After 70-plus years of illegality, little is known about the economics of the drug.) A cannabis tax could be like an excise tax (a point-of-sales tax added to any sales tax, as exists in many places for gasoline, alcohol, cigarettes, and, potentially, soda), or it could be a pricey license to sell the product. Either method would increase the cost to consumers, who would in turn buy less of the product—a public health benefit in either instance. And unless people buy drastically less soda or pot, the government will pocket some extra cash. So far, it seems like a win-win situation.

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