A Sober Look at the Addictive Pot Tax

The issue of legalized marijuana is slowly carving out a spot for itself on the Wyoming political scene. In January the National Organization for Reform of Marijuana Laws, seductively abbreviated NORML, submitted a proposal for a 2016 ballot initiative in Wyoming, seeking to:

• make it legal for anyone 21 or older to use marijuana;
• allow medical use and home cultivation; and
• ban the state from firing pot-smoking employees.

The initiative has some indirect legislative support. In the last session, Democrat State Representative James Byrd sponsored a bill to move Wyoming toward legalization. The bill failed introduction but is probably not the last of its kind. The reason: another addictive product often related to pot legalization.

Tax revenue.

While Representative Byrd's bill did not mention taxes or government revenue, the 2016 ballot initiative from NORML suggests a sales tax on marijuana that…

could not exceed 25 percent of the wholesale value. Sales taxes would go toward administering the program, with additional revenue going to the state's General Fund … Excise taxes … cannot exceed 15 percent prior to Jan. 1, 2020.

NORML cleverly panders to both sides of the political battlefield. Government expansionists can support legalization because they get more revenue for more spending programs. Conservatives can say that they are taxing a sin but they are also limiting the tax in order to keep government from growing too big.

It would be naïve to under-estimate the intoxicating power of the tax argument. In Colorado, just six months after legalization, the state is collecting $4.5 million per month in pot taxes. The forecast for 2014 points as high as $70 million.

The state's authority to tax marijuana is not without challenge. A lawsuit in the state of Washington claims that since marijuana is illegal under federal law, states have no right to tax it. But with this fresh, new revenue source before them, states are not likely to give up the right to tax pot without a fight. On the contrary, when other states see the honey flowing from Colorado's pot tax the question is not how they will oppose legalization, but how they will spend the new tax revenue.

And herein lies the real legalization question. Do we want government programs to be paid for with money from an addictive drug? Is it morally acceptable for government to fish in increasingly muddy tax waters for another fistful of taxpayers' dollars?

If we accept the legalization of marijuana for tax purposes, then what's next? Cocaine? Meth? Prostitution? Hunger games?