American Cannabis Report Quotes Epstein on GOP Tax Reform as Potential Cannabis Boost
The American Cannabis Report contacted BGP's Ruth Epstein for her observations regarding a recent CNBC article on a potential benefit of the GOP tax reform policy.
The CNBC article, "How Tax Reform Could Push More States to Legalize Marijuana" suggests that certain high-tax states are slated to lose State and Local Tax (SALT) revenues under the new GOP plan, which will cause them to raise taxes 7-8% to make up the shortfall.
These states risk losing residents who might leave the state, or might have to take extreme and unpopular measures such as increasing property taxes.
In the past, legalized gaming proliferated to 40 states due to similar revenue-seeking necessities.
"One state, looking for new revenue without wanting to pass unpopular tax increases, authorizes licenses for riverboat casinos or poker rooms or tracks with slot machines.The state next door sees its residents cross the border to gamble and they inevitably say to themselves, "Why are we losing all of this revenue to Indiana/ New Jersey/ Arizona?" Then they authorize their own casinos to try to recapture the revenue (and it's far easier to justify the decision when the state next door is already doing it)."
A logical alternative for 2018: the cannabis industry.
Epstein's response: "This CNBC piece very effectively describes how blue states could find a way to use recreational cannabis to raise revenues to alleviate the pain caused by the curtailment of state and local tax deductions that will dramatically impact states like New York and New Jersey. It’s a great example of the Law of Unintended Consequences. Although the new tax bill is bad legislation, perhaps it will end up creating some good things, including the end of the failed prohibition policies."