Wednesday, June 6, 2018

California Dreaming? More Like Disappointing

While Twenty-One Debunked is pleased that the fifth largest economy in the world, California, has fully legalized cannabis for recreational use and even finally has legal weed stores, nearly half a year later the promise of booming tax revenue seems to have been a letdown thus far.  While any cannabis legalization is better than prohibition, and any tax revenue is better than zero, of course, it still seems to have fallen a bit short of the promises.

How so, you ask?  Let us count the ways:
  1. Taxes are too high.  When all of the several different taxes are added in, it adds up to as much as 45% of the before-tax price in some municipalities. 
  2. That is, of course, if you can even GET any legal weed at all in one's municipality of choice.  Local option means that many towns and cities have chosen to locally ban (or delay indefinitely) the implementation of full retail legalization.
  3. And last but not least, the age limit is 21.
Add all these factors up and you have a recipe for a thriving, if smaller, black market for cannabis.  Especially since the original pre-legalization black market was not yet eradicated.  Had the Golden State started out with significantly lower taxes, more municipalities allowing retail cannabis stores, and an age limit of 18 (though the first two factors seem to be the most important), they could have easily eradicated the black market within a few years and then been able to raise the taxes on cannabis to even a much higher level than they are now without the black market coming back anytime soon.  That is basically what Rear Admiral Luther E. Gregory found out after the repeal of alcohol Prohibition in Washington State.  And it worked.

So, in a nutshell, here is how California can solve this problem:
  1. Lower the combined taxes on cannabis to no more than $10/ounce (or 10%, whichever is lower) for the first year or two.  And make cannabis retail licenses cheaper than liquor and tobacco licenses.
  2. Remove excessively strict levels of local option or at least provide incentives for municipalities to allow retail weed stores.
  3. Lower the age limit to 18.  Yesterday.
  4. Crack down on any vendors who are caught flouting any of the new laws, and blacklist violators from getting any retail licenses in the future.
  5. After the first year or two (or three), jack up the taxes on cannabis to as much as $50/ounce at the cultivation level and additionally 10-15% at the retail level.  Or make the tax proportional to THC content.
Problem solved.  Next.  But of course, that would make far too much sense, right?

Oh, and as long as we are talking about taxes, keep in mind that California's alcohol taxes are below the national average.  Raising those taxes would be a good place to start if they want more revenue quickly.

At least America's friendly neighbor to the north will not be repeating our mistakes.  Taxes in Canada will start out quite low, and the age limit will be 18 or 19 depending on the province.  Watch their economy boom faster than you can say, "O Cannabis!"

1 comment:

  1. California has too many Democratic legislators for laws to make sense over there. Of course, taxes on Cannabis shouldn't be high. This will reduce the black market demand and make the legalization of Cannabis more effective. The smoking age of Cannabis should be 18 but Denocrats would never consider this idea to be reasonable.

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