1. Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome Pat Oglesby ISSDP Rome2014 www.newrevenue.org Revenue from Cannabis

2. 3 Big Questions Tax: Whether: Yes or No? How much? How? Measure $ (€, £, ¥)? Gm? THC? Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

3. Whether? Non-commercial alternatives: p. 12-13 Monopoly alternative: p. 3-5 – Liquor monopolies – Reversible – Nimble pricing – Limits profit motive Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

6. ¡Uruguay, Si! ¡Taxes, No! But, assuming tax model: How much? – A story Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

7. How much tax? (Pre-tax Prices  ) Post-tax price: – Not too high – Not too low Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

8. Tax as % of final price Cigarettes in Europe: 70% and more Marijuana in Washington ≈ 35 to 40% Marijuana in Colorado ≈ 20% ASSUME HEROICALLY: – $20 price per unit (1/8 oz.?) at wholesale – $40 price per unit at retail – Next slides just show rough relationship Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

9. Washington Pre-taxRateTaxAfter-tax Producer$1025%$2.5$12.5 Wholesaler$2025%$5$25 Retailer$4025%$10$50 $17.5 Tax = $17.5/$50 = 35%

10. Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome Colorado Pre-taxRateTaxAfter-tax Wholesaler$2015%$3$23 Retailer$4012.9%$5.16$45.16 $8.16 Tax = $8.16/$45.16 = 18%

11. Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome Tax breaks: Medical and homegrown? Colorado: 64% of market still medical, ≈ tax-free

12. What? Potency: p. 6-7 (Price) (Weight) Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

13. Problems with Price Bundling: p. 9 at bottom Vertical Integration: p. 10 at n. 38 Price base amplifies problem of price drop Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome Tax rate100%$5/gram100%$5/gram Pre-tax price$5 $1 Tax$5 $1$5 After-tax price$10 $2$6

14. Weight: P. 7-8 – Incentive for potent marijuana – So: Bud vs. Trim: CO: 62¢/gm vs. 10¢gm. Dry vs. Concentrated Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

15. Other Questions: P. 11 Where to collect: Early in supply chain Environmental friendliness Small business advantages Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome

16. Nimbleness We know that we don’t know Thank you – More at www.newrevenue.orgwww.newrevenue.org Suggestions to po@newrevenue.orgpo@newrevenue.org Ace in the Game Pat Oglesby www.newrevenue.org ISSDP Rome