With more and more states legalizing marijuana for recreational use, experts predict that federal legalization is inevitable. Yet along with this change comes a major question: how can governments effectively tax marijuana to produce revenue and encourage the most socially desirable outcomes?
The answer is far from simple, says Jonathan P. Caulkins, a professor of operations research and public policy. He argues that legalization will bring a host of challenges to the forefront, from keeping prices from falling too drastically to determining a fair tax rate given marijuana’s lower-income users (60% of the product is consumed by people with a high school education or less). Read his in-depth analysis in the full article from National Affairs.