Friday, 13 September 2013

Grover Norquist: Don't Bogart Those Marijuana Dispensary Taxes

Earl Blumenauer is a Democratic congressman from Portland, Ore., and he’s basically what you’d expect. He’s a proponent of mass transit and a big fan of animal rights and bicycle commuting. He wears bow ties.

Grover Norquist needs no introduction. He’s the nation’s most famous anti-tax crusader, a conservative strategist, and a ubiquitous talking head always ready with pithy, acerbic formulations of his uncompromising small-government beliefs.

And so it will make for a charming bit of odd-couple theater this morning when the two men hold a joint conference outside the U.S. Capitol. They’ll be combining forces in support of what they agree is an embattled segment of the small business community: cannabis dispensaries. Pot tends to be an issue on which politicians on both ends of the political spectrum can find common ground: Civil libertarians on the Left think the state shouldn’t be throwing people in jail for smoking or selling a bit of grass, and libertarians on the Right agree. But today’s event, hosted by Blumenauer’s office, Norquist’s Americans for Tax Reform, and the National Cannabis Industry Association, isn’t just about legalization. It’s about taxes.

Currently, cannabis dispensaries are proliferating in those states where marijuana is legal for medicinal purposes or, as in Colorado and Oregon, for simply getting baked. But dispensaries aren’t treated like other businesses as far as the federal tax code is concerned: They’re not allowed to deduct their business expenses from their taxable income, which effectively translates into a far higher tax rate. Dispensaries argue that tax policy forces them to charge more for their product, making it more likely that clients will simply turn to illegal and unregulated—and non-tax-paying—street dealers.

Blumenauer has introduced legislation to rectify this, and Americans for Tax Reform today will announce its support for it. This isn’t the first time Norquist has lent his name to the cause of marijuana legalization, and it probably won’t be the last. The Americans for Tax Reform’s white paper on the topic, also due to be released today, is entitled Legal Cannabis Dispensary Taxation: A Textbook Case of Picking Winners and Losers Through the Tax Code.

Drug policy types often argue that pot decriminalization will finally be on firm ground when governments start relying on tax revenue from it—making it that much harder to reverse course. That dispensaries are already complaining about the taxes they have to pay suggests just how mainstream the industry has become.