The memo assignment describes the situation and request a recommendation to the problem at hand through an assignment document.

Minnesota Vice and Revenue Department MEMORANDUM To: John Lind, Tax Revenue From: David Clough, Budget Office RE: Marijuana Tax Dear John, As you may be aware, the movement to legalize marijuana is gaining momentum in the United States with the passage in several western states. Given that our neighbors to the north have already nationally legalized the substance, we should consider revenue opportunities. With legalization and the entrance of new businesses, we estimate the supply in Minnesota to be Q = - 60 000 + 12 000P (units in grams). More importantly, given the competition to the north and west, demand is estimated to be Q = 420 000 - 8 000P. Here at the Budget Office, we are considering a $5 per gram tax. The governor is interested as to what the effect will be, and how to communicate this to fellow Minnesotans. What is the impact of a $5/gram tax on price and output? Is this the optimal tax to maximize tax revenue? Should we be concerned about any outcomes that would result? Regards, Dave