The Government of Canada under Prime Minister Justin Trudeau still plans to legalize cannabis nationwide. Though not finalized yet, it is tentatively set to go into effect sometime in July 2018. And various provinces are already preparing for it.
As for what the age limits will be, that will be up to the provinces to decide. The federal age limit will likely be 18, and most provinces have tentatively decided that their own cannabis smoking ages will match their drinking ages (currently 18 in Alberta, Manitoba, and Quebec, 19 elsewhere). Thus, the age limit for cannabis in Canada will most likely end up being 18 or 19, depending on the province.
For the record, Twenty-One Debunked believes that the age limits for alcohol, tobacco and cannabis should be 18, or at least no higher than that. We in the USA (where in the growing number of states in which cannabis is legal, the age limit is 21) can really learn a lot from our friendly neighbor to the north!
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Saturday, November 18, 2017
Wednesday, November 8, 2017
How to Quash a Black Market in Five Easy Steps
A black market (or underground economy) typically occurs when the legitimate market for a particular good or service is either nonexistent, out of reach, or otherwise far too insufficient to meet the demand for that good or service. Black markets are by definition illegal to one degree or another, while informal markets that are technically legal or quasi-legal are known as gray markets. While the usual proximal cause for a black market is prohibition of a good or service (and thus no legitimate market existing), a black market can also occur (albeit to a much lesser extent) when the taxes and/or other government fees on or surrounding the product or activity are excessively high relative to what consumers are willing to pay (and relative to the informal economy). Sometimes taxes can be so high so as to be considered "prohibition by price", though the relative price difference is typically far more important than the absolute price.
Twenty-One Debunked believes in raising alcohol taxes significantly in conjunction with lowering the drinking age to 18. The level we suggest ($24/proof-gallon, equalized for all alcoholic beverages), though significantly higher than now, would still be too low to encourage a significant amount of moonshining and bootlegging. But what about cannabis, which is currently being legalized in more and more states, many of which started out with fairly high taxes and/or licensing fees? Though a positive development overall, in some of such places, the black market still exists to one degree or another, albeit much less so than when cannabis was illegal. And of course we all know that places like NYC with extremely high cigarette taxes have their share of black markets in untaxed, out of state, counterfeit, and/or stolen cigarettes as well. So how does one solve such a problem?
Enter Rear Admiral Luther E. Gregory. In the 1930s, Prohibition was repealed, and Washington State along with other states were now faced with the task of shutting down the well-established bootleggers and speakeasies that persisted even after Repeal. Admiral Gregory was asked to head the state's Liquor Control Board, and given carte blanche to come up with a solution, one which worked surprisingly well in fact:
Problem solved. The legal market proved to be competitive with what was left of the black market, and drinkers preferred the former over the latter, driving the latter out of business. And the black market never came back even after raising taxes dramatically. Looking back, it should have been so obvious indeed.
Substitute "cannabis" for "alcohol", and there is no reason why this strategy would not work in this day and age. And instead of holding down taxes for three years, merely one year should be sufficient to get the same results, even if the hike is automatically scheduled. Doing so would minimize the greatest risk of the strategy, namely, that the fledgling legal cannabis industry would then become so powerful that they would resist and successfully quash any attempt to raise taxes in the future. They would not become that powerful in just one year, and probably not for several years, but the black market could be easily quashed in that timeframe all the same.
As for cigarette taxes, both NYC and NYS should implement this strategy as well. And of course, the low-tax states such as Virginia should also raise their cigarette taxes (within reason) so as to not be such a source state for cigarette smuggling to other states. And of course, lower NYC's age limit back to 18 as well. Same for cannabis in legalized states as well.
In fact, this strategy would work for just about any type of black market. That's because it is based on the hard facts of economics, not half-baked wishful thinking. Unlike prohibition or unrealistically high age limits, taxes are not a "blunt" policy instrument, but rather a razor-sharp, double-edged sword.
So what are we waiting for?
Twenty-One Debunked believes in raising alcohol taxes significantly in conjunction with lowering the drinking age to 18. The level we suggest ($24/proof-gallon, equalized for all alcoholic beverages), though significantly higher than now, would still be too low to encourage a significant amount of moonshining and bootlegging. But what about cannabis, which is currently being legalized in more and more states, many of which started out with fairly high taxes and/or licensing fees? Though a positive development overall, in some of such places, the black market still exists to one degree or another, albeit much less so than when cannabis was illegal. And of course we all know that places like NYC with extremely high cigarette taxes have their share of black markets in untaxed, out of state, counterfeit, and/or stolen cigarettes as well. So how does one solve such a problem?
Enter Rear Admiral Luther E. Gregory. In the 1930s, Prohibition was repealed, and Washington State along with other states were now faced with the task of shutting down the well-established bootleggers and speakeasies that persisted even after Repeal. Admiral Gregory was asked to head the state's Liquor Control Board, and given carte blanche to come up with a solution, one which worked surprisingly well in fact:
- End Prohibition, first of all.
- Give amnesty and issue licenses to anyone willing to play by the state's rules, whether former bootleggers or otherwise.
- Set the alcohol taxes as low as possible at first, the lowest in the country in fact.
- Punish sellers who don't play by the rules, with an iron fist--i.e. blacklisting scofflaws from ever selling liquor in the state again.
- After holding down alcohol taxes for three years, abruptly raise taxes to the point where they're now the highest in the nation.
Problem solved. The legal market proved to be competitive with what was left of the black market, and drinkers preferred the former over the latter, driving the latter out of business. And the black market never came back even after raising taxes dramatically. Looking back, it should have been so obvious indeed.
Substitute "cannabis" for "alcohol", and there is no reason why this strategy would not work in this day and age. And instead of holding down taxes for three years, merely one year should be sufficient to get the same results, even if the hike is automatically scheduled. Doing so would minimize the greatest risk of the strategy, namely, that the fledgling legal cannabis industry would then become so powerful that they would resist and successfully quash any attempt to raise taxes in the future. They would not become that powerful in just one year, and probably not for several years, but the black market could be easily quashed in that timeframe all the same.
As for cigarette taxes, both NYC and NYS should implement this strategy as well. And of course, the low-tax states such as Virginia should also raise their cigarette taxes (within reason) so as to not be such a source state for cigarette smuggling to other states. And of course, lower NYC's age limit back to 18 as well. Same for cannabis in legalized states as well.
In fact, this strategy would work for just about any type of black market. That's because it is based on the hard facts of economics, not half-baked wishful thinking. Unlike prohibition or unrealistically high age limits, taxes are not a "blunt" policy instrument, but rather a razor-sharp, double-edged sword.
So what are we waiting for?
Sunday, November 5, 2017
Legalization of Cannabis Not A Disaster After All
Five years after cannabis was first legalized for recreational use in Colorado and Washington in late 2012, over three years after full implementation of such legalization in 2014, and several more states since then, what can we conclude from the data so far? The best evidence shows that such legalization was NOT a disaster after all, the fears were ridiculously overblown, and if anything legalization turned out to be a win-win-win situation for everyone but the crooks, creeps, cops, and cronies. It saved a ton of money on law enforcement and related costs, brought in major tax revenue, and the supposedly large social costs of legalization that the naysayers feared still have not panned out even several years later. And thus, no good reason for cannabis to remain illegal anywhere else at this point.
And now that California Dreaming has finally become a reality in a critical number of states, Twenty-One Debunked will become that much more aggressive in advocating that the age limits for cannabis in legaliztion jurisdictions be lowered to 18 going forward. While we very grudgingly supported legalization initiatives with an age limit of 21 while they were being debated and voted on in the name of pragmatism, now that the proverbial dam has broke it is time to take on the age limit issue with at least the same tenacity that we have shown with alcohol.
To all of those who still support cannabis prohibition: how does it feel to be on the wrong side of history? Because we wouldn't know anything about that.
And now that California Dreaming has finally become a reality in a critical number of states, Twenty-One Debunked will become that much more aggressive in advocating that the age limits for cannabis in legaliztion jurisdictions be lowered to 18 going forward. While we very grudgingly supported legalization initiatives with an age limit of 21 while they were being debated and voted on in the name of pragmatism, now that the proverbial dam has broke it is time to take on the age limit issue with at least the same tenacity that we have shown with alcohol.
To all of those who still support cannabis prohibition: how does it feel to be on the wrong side of history? Because we wouldn't know anything about that.