Marijuana Tax: Revenue Windfall or Blood Money? Tax Attorney Rob Wood Discusses State Pot Tax

New Jersey governor and Republican presidential candidate Chris Christie has a solid record as an opponent of new taxes, having vetoed more proposed tax increases than any other governor in modern times. As to marijuana, Christie has said that, not only will there never be marijuana tax revenue in New Jersey, the drug will not be legalized while he is governor.

Rob Wood

Rob Wood

Christie has referred to marijuana tax revenues as “blood money.” Tax Attorney Rob Wood discusses Christie’s stance and the marijuana tax issue in this report, based on his Forbes article “Chris Christie Doesn't Like Taxes, Especially On Marijuana And Yachts.” [Wood has previously discussed marijuana taxes on LBN.]

Christie has commented on the less-than-expected tax revenues Colorado has received from its marijuana tax. Wood notes that the topic of taxing marijuana—medicinal and recreational—is a huge topic today. Wood says it’s not clear that Colorado’s results are enough to base a decision on, but the issue is a political one for Christie, and his effort is to speak to voters.

In that regard, says Wood, Christie has emerged as a stronger candidate than some thought he would be. “He’s kind of a fighter, and he’s able to pull out quotes from the experience in Colorado” and use them effectively. The thing to remember, Wood points out, is that Colorado made a lot of money on marijuana taxation but was expecting much more than it got. This caused Christie and others to point out that “a lot of the revenues that they expected went into the black market” and failed to surface as tax revenues.

As to a tax structure, Wood says that Colorado, Washington, and Oregon are all following a similar course. They tax medical marijuana at one rate and recreational marijuana at a higher rate. “And that ties into what the federal government has been talking about.” Wood notes that there have been federal efforts—unsuccessful as yet—to legalize marijuana and tax it at rates up to 50%. This is a subject that brings out a lot of controversy, and it will be years before the controversy is resolved.

And speaking of marijuana tax in Colorado, a lawsuit has been filed urging the proposition that requiring marijuana companies to pay taxes violates their Fifth Amendment right against self-incrimination. Wood says that this is a very clever argument. It has not been successful so far, but there may be some merit in it.

For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network.  The Legal Broadcast Network is a featured network of the Sequence Media Group.