What Are The Implications of Taxing High-THC Weed? 

Should California follow Illinois' lead and tax according to potency?

click to enlarge Concentrates extracted from cannabis such as shatter (above) and wax (below), can yield THC levels of more than 90 percent. By contrast, the most popular flower strains contain levels between 17 and 28 percent.

Photo courtesy of National Institutes of Health

Concentrates extracted from cannabis such as shatter (above) and wax (below), can yield THC levels of more than 90 percent. By contrast, the most popular flower strains contain levels between 17 and 28 percent.

On New Year's Day, Illinoisans were able to buy their first legal cannabis for recreational purposes. I spent much of my youth dodging the cops in Chicago and assuming, with good reason, that pot would never be made legal. So it's even weirder for me than legalization in California was.

But there, as here, it's expensive, thanks to taxes and regulations (mostly taxes). A friend of mine forwarded to me a picture of a receipt someone had posted on Facebook from the Sunnyside Dispensary in Rockford, Ill. (so far, that mid-sized city's only recreational pot shop) on New Year's Day. It was for three grams of cannabis concentrates: two of shatter and one of so-called "budder," for a pre-tax total of $220. The final bill came out to $302.50, which included a modest local tax, an immodest state tax of $19.25, and a gargantuan state excise tax of $55. The total tax hit of 37.5 percent wouldn't shock many Californians, but some pot consumers in Illinois, who had been used to paying a tax rate of zero, were perfectly plotzed. "People ... are standing in line freezing their azzes off for this," wrote the guy who posted the receipt (but presumably didn't make the purchase). "No amount of high is worth that. Some people are idiots."

It does sound ridiculously expensive, and maybe it is, but there's a bit more to the story. The excise tax rate on everyday flower in Illinois is just 10 percent. The rate on concentrates with high levels of THC (greater than 35 percent) is a whopping 25 percent. If the buyer had opted for three grams of Humble Pie flower, the total would have been $82.50. Humble Pie, with a THC level of 20.5 percent, sells at Sunnyside for $20 a gram, so even six of them would have cost just $165, including taxes. Whether concentrates like shatter are worth such an enormous premium comes down to whether a smoker really feels he or she needs such high levels of THC, the component of the pot plant that gets you high.

California lawmakers might want to watch what happens in Illinois as they consider whether to follow the advice of the independent Legislative Analyst's Office, which last month issued a report recommending that California's state pot tax, now based on the sale price, be based on THC levels instead. The industry and many lawmakers blame the state's 15 percent rate (plus often-high local rates) for the fact that the cannabis business has struggled since recreational pot became legal here in 2018, with some companies big and small laying off workers lately.

In assessing whether such a tax would be fair, one consideration would have to be just what it means to ingest cannabis with ultra-high levels of THC. For anyone who smoked pot in 1979, or even 1999, even today's everyday cannabis often seems like it's too much. One hit of today's average weed is often like smoking a whole joint of what in the olden times was considered decent (if brown, crumbly, and full of seeds) pot. And concentrates often contain several times the THC that high-quality bud contains. Does anybody really need such high doses?

That might be the wrong way to frame it. Neo-prohibitionists often point out how strong pot is these days, but they reliably leave out the fact that, as a result, people ingest far less of it to achieve the same high. "I adjust my dose based on potency, so I only need a tiny sip of a higher potency product, vaporized, and five or more puffs on a whole plant medicine, smoked, for the same effect," said Debby Goldsberry, executive director of the Magnolia Wellness dispensary in Oakland. And, she notes, concentrates "don't have the odor when burned. Overall, the extracts are way easier to properly dose, and they are more cost effective, due to the small dose required for the effect."

Easy for her to say in a state that, for now, doesn't tax shatter, wax, dabs, budder, and so on at 25 percent.

Still, it might well make sense to tax concentrates at a higher rate. For all their benefits, concentrates and edibles are responsible for more problems — such as people overdoing their dosage and freaking out, kids getting into people stashes, etc. — than regular pot is. Furthermore, "we don't know what all the health implications of these products are," said Ziva Cooper, research director of UCLA's Cannabis Research Initiative. "They could potentially be pretty dangerous." The problem, she added, is a lack of research, which is a result mainly of pot's illegality at the federal level.

If high-THC concentrates are the most problematic, and most people are satisfied with regular bud or edibles with lower THC levels, maybe it would make sense to keep taxes low for the masses while letting people who insist on consuming what is essentially super-pot pay more of the freight. 



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