Budgetary Marijuana, Part Dude!
Via Drudge, the California State Board of Equalization sez a new sales tax on newly legalized marijuana would bring $1.4 billion in revenue. Um, yeah, it would, if we could somehow convince all those street dealers to collect sales tax on top of the exorbitant prices they charge now and pay all that tax to the state like any good, law-abiding retailer would. And then you’d have to convince all the potheads to buy just as much of the stuff as they used to, despite now having to pay more, at which point the dealers will scratch their heads wondering why they didn’t think to jack up their prices beforehand.
But perhaps I err. Maybe peace and love really do trump everything else, including the law of supply and demand?
July 16th, 2009 at 2:03 pm
There’s also the law of addiction, X. When I started smoking, a pack of Marlboro Red at the Clark gas station was 40 cents. Now, at my local Marathon, it’s $7.60. At Costco, in the neighboring county, it’s about $4.50 but they’re only available by the carton — $45.00.
We’ll pay anything for our fix. Anything.
July 16th, 2009 at 3:37 pm
Of course black market sales won’t result in substantial tax revenue.
But if it becomes legal to buy/sell/distribute marijuana, then we could tax the legal sales.
It would be cheaper to buy MJ from a store, and pay tax on it, than to buy it from the black market, where the dealers have to charge more to compensate for the risks (arrest, robbery) and have expenses related to protecting themselves (security systems, guns).
It would also be “cheaper” in the sense that the buyer would have less risk of criminal liability buying MJ legally from a store than buying it illegally from the black market.
Any policy to tax MJ would have to make it legal to buy/sell/possess mariijuana under at least some conditions. Hopefully that’s what California will do.
Marijuana sales are already legal in CA under certain circumstances: namely, the pot clubs that provide it to people with doctor’s notes. CA could probably effectively tax those organizations.
July 16th, 2009 at 5:54 pm
I think Daryl’s got this one mostly right. There’s a markup that comes with something being illegal. The problem becomes the ease with which one can grow it for themselves, and that’d be tough to tax. You’d have to make it illegal to grow your own, unless I’m underestimating the difficulty.
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July 17th, 2009 at 8:50 am
[...] A criminal enterprise already exists to evade the law. As long as it’s profitable to avoid tax payments, that enterprise will continue even if the product is now legal. [...]
July 17th, 2009 at 9:25 am
Reading myself, I asked myself what happened after prohibition was repealed. The quick & dirty answer seems to be that there is a move to legal commerce whether or not there is a black market infrastructure in place. But it could be more complicated than that…
July 17th, 2009 at 10:42 am
Well, it is rather easy to make beer, but most people go buy it. I suspect the same would happen with MJ.
Mostly though, it should be a state decision, not a federal one.
July 17th, 2009 at 11:15 am
There’s so much more to be gained from legalization than just a few million dollars in tax revenue.
They should also be considering some of the less obvious side benefits like significantly reducing our hugely overburdened court dockets while simultaneously reducing tax-payer funded Public Defense costs.
Plus there’s the extra prison beds that wouldn’t need to be used for these non-violent “criminals”.
There’s also the HUGE (dormant) potential that lies within the hemp industry (non-smokable variety) that the “cotton-barons” have been so successful in keeping subdued for so long.
The bottom line is that regardless of the street-sellers who might continue to sell their products illegally, the potential for ANY new revenue in these drastic times should not be scorned.
July 17th, 2009 at 11:57 am
It banks on the fact that most people don’t want the hassle of making their own, whatever it is, be it corn or weed.
Its 100% legal and fairly easy to make your own beer and wine but the vast majority of people still go to the store and buy it rather than make it. You can roll your own cigs but most still buy them as well.
I even recently read of one enterprising guy who’s growing his own tobacco to evade the taxes on cigs. 100% legal but I bet you can count on one hand the number of people doing it…
July 17th, 2009 at 12:52 pm
Growing your own takes space and light–lots of light. They can find growers around here by figuring out who’s either using legally or diverting illegally huge rivers of power into one house.
Of course, those are dealers. I don’t know how much power it would take to grow a one- or two-person supply.
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July 17th, 2009 at 12:58 pm
one plant should be enough for one person. 2 at the most. and the stuff grows…well, like a weed.
July 17th, 2009 at 3:03 pm
I get the impression some of the commenters here have never actually made their own beer. I can tell you first-hand, it’s an awful lot like work.
.-= tgirsch´s last blog ..The Health Care Reform Debate =-.
July 17th, 2009 at 4:24 pm
I might start growing my own tobacco. Like my grandfather did. My mother told me she was rolling his cigarettes.
July 17th, 2009 at 5:30 pm
I agree with TGirsch; making your own beer is not easy, and making beer that tastes nearly as good as your favorite brand is harder still. So of course most people buy beer rather than make it themselves. The question is, would they start brewing their own if the price of commercially-available beer skyrocketed to Prohibition levels. I think they would.