Vermont

Thank you for the opportunity to testify on the tax policy issues associated with legalized retail marijuana. Our testimony includes five parts:
1. An overview of the marijuana tax rates and structures that exist in the four states (Alaska, Colorado, Oregon, and Washington) where retail marijuana can be legally sold.
2. An analysis of early stage revenue trends in the two states (Colorado and Washington) where legal, taxable sales of retail marijuana have been taking place since 2014.
3. A discussion of issues associated with different types of marijuana tax bases–specifically weight-based taxes, price-based taxes, and hybrids of these two structures.
4. A discussion of issues involved in choosing a tax rate for marijuana.
5. A discussion of long-run issues related to the structure of marijuana taxes and their revenue yield.

Thank you for the opportunity to comment on Vermont’s effort to establish a system for regularly evaluating its tax expenditure programs. Data-driven tax expenditure evaluations are a valuable tool for gauging the effectiveness of policy initiatives pursued via the tax code. ITEP is supportive of Vermont’s efforts in this area and is generally encouraged by the work completed thus far by groups such as the Joint Fiscal Office and the Pew Charitable Trusts. Rather than rehash the many useful recommendations made by those organizations, these comments focus on two areas that may be in need of further attention: the scope of what is labeled a “tax expenditure,” and the importance of data infrastructure advancements to the success of these evaluations.