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Lawmaker: Let’s Tax Weed

by Hugh McQuaid | Mar 8, 2012 3:13pm
(6) Comments | Commenting has expired
Posted to: Courts, Legal, Taxes

Last year the legislature decriminalized marijuana, this year they’re thinking about allowing its medicinal use. One lawmaker is wondering why the state’s not enforcing a tax on it.

There’s been a law on the books allowing a tax on marijuana and other illegal drugs since 1991. On Friday the Planning and Development Committee will consider a bill by Rep. Arthur O’Neill, R- Southbury, that would encourage local police to enforce the tax by sending a portion of the revenue back to their town.

Currently, marijuana is taxed at $3.50 a gram but it’s rarely enforced after arrests and very few people voluntarily pay taxes on illegal substances.

According to the Department of Revenue Services the tax on illegal drugs brought in $33,609 last year. The department estimates that many of the people buying the tax stamps used to impose the tax are actually stamp collectors looking to round out their collections.

And rather than tax drug dealers, police tend to look for revenue by seizing their assets after they’re convicted.

O’Neill said given last year’s law decriminalizing small amounts of marijuana and this year’s debate over its medicinal use, it’s time to start collecting the tax.

“To the extent that more and more there’s this notion it should be treated like cigarettes or alcohol or something, well then collecting the tax on it should happen more aggressively too,” he said.

Though the bill is still being drafted, O’Neill said at least 50 percent of the revenue should go back to municipalities. Local police departments do most of the work putting drug cases together, he said. And if their towns stand to benefit from the tax, police will be more inclined to enforce it, he said.

But according to DRS, imposing the tax is more effort than it’s worth. The department must file paperwork over a long period of time to collect the tax through wage withholding after someone is released from prison.

“It’s a lot of work for not a lot of return,” spokeswoman Sarah Kaufman said.

Revenue Services Commissioner Kevin Sullivan said the tax was envisioned as a law enforcement tool, not a revenue generator.

“There’s really nothing much to share,” he said in a statement. “For most narcotics busts, which is when the taxable transactions become known, the city or town has and uses the much better remedy of asset seizure and forfeiture incident to arrest and prosecution. The tax is only involved when that does not happen.”

But O’Neill said that’s not necessarily the case. In the early 1990s, when several states passed similar legislation, some were successful in generating as much as a million dollars in revenue, he said.

Those were states like Kansas and Nebraska where the cost of living is much lower than Connecticut. Here everything costs more so there’s the potential for a lot more revenue, he said.

“These are not poor communities. We’re not talking about downtown Bridgeport. We’re talking about people who are dealing drugs, or in possession of large quantities of drugs, who own substantial assets,” he said.

O’Neill is hoping the potential new revenue stream will have local cops garnering evidence for the state, who can put liens on some of those assets to recover the tax.

“For some reason DRS has just never wanted to pursue this. But I think if local law enforcement start putting the cases together and saying, ‘hey, here’s the evidence you need to collect the tax,’ it might induce DRS if it’s kind of gift wrapped for them,” he said.

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(6) Comments

posted by: miketcha | March 8, 2012  6:16pm

Legalize it and make it available on Sundays too. Then you will see some real revenue flow into the general fund and less auto accidents

posted by: ... | March 8, 2012  11:17pm

...

Go for it if it’s a viably collectable tax. However, considering our luck so far with the online taxes (‘Amazon Tax’), this won’t be an easy transition.

posted by: Reasonable | March 9, 2012  10:18am

Steven Jones:  Gov. Dan (The Tax Man) Malloy has no problem with the transition of new taxes. It’s realistically - “his middle-name.”

posted by: jhly1122 | March 10, 2012  9:05am

Good luck with collecting taxes from someone doing something illegal anyway.  HOW much will cost to enforce the law?  Bet much more than the tax that could be collected.  Do you think folks growing Pot will call call up their tax account and ask how to figure the tax on their illegal pot patch?

posted by: Reasonable | March 10, 2012  1:25pm

jhly1122: I wonder if you are also this pessimistic at home?

posted by: RC | March 13, 2012  9:07am

Great article, Comm. Kevin Sullivan’s comments regarding taxation of illicit drugs is spot on.  The taxation tool DRS is talking about is and always has been an enforcement tool.  The police trained in drug enforcement know all about filling out the taxation forms but rarely do so.  Asset Forfeiture, run by the Chief States Attorney’s office, allows police to seize the assets and proceeds of criminal activity, then distributes those proceeds back to the agency that seized the assets. Taxation goes to the State. As far as legalizing marijuana, I think we’re putting the cart before the horse.  The underlying problem of illegal marijuana is the money that fuels the criminal activity necessary to deliver marijuana to the american market.  (think Mexican Cartel) States need to first address the supply issue before legalizing or decriminalizing it.  Currently States prohibit growing marijuana, even for personal use, and equate one plant as one pound of marijuana.  A better solution would be to legalize home grown marijuana, allow a set amount of plants that can be grown and sell grower permits, just like hunting licenses. (say at 10 plant permit for $100 or what ever). The permit would come with tax stamps that the grower sticks to his/her bag of weed, thus marking it as home grown.  There would be no need to buy marijuana from a dealer cause you would grow your own for much less. No need to worry about a grower giving/selling to his friends - his friends would also be growing their own. The money is out of the criminal pipeline, people get what they want, and government gets revenue thru permits. Any legislators out there want to propose that.