The two biggest reasons appear to be high taxes/prices and a limited number of legal dispensaries/outlets. The black market can easily undercut such high prices and fill in the gaps left by not enough legal retail stores, and do not have to deal with the rather onerous licensing and other regulations that legal businesses must adhere to. When there is an artificial shortage of legal cannabis, the black market easily picks up the slack, and where there is an oversupply that makes it less profitable, some of it gets diverted to the black market to sell illegally to other, non-legalization states as well.
And then there is that 21 age limit as well, which is currently the case in all legalization states. That also encourages illicit sales as lower-hanging fruit compared to legal dispensaries with strict enforcement. Can we get a resounding, "DUH"?
So what to do? Cut the taxes on cannabis, yesterday, for at least a year or two before raising them again. Consider a complete tax holiday for a few months, like Oregon did when legalization began there. Ease up a bit on licensing regulations (and fees) for both producers and retailers. Allow at least all liquor stores to sell weed alongside their booze, and further consider allowing any store that sells cigarettes to also sell weed as well, including grocery and convenience stores. Lower the age limit to 18, yesterday. Encourage current black market dealers to "go legit". And once these things are done, then crack down hard on the black market, particularly the illegal commercial growers and higher-ups in the illegal businesses and organized crime syndicates.
Problem solved.
And of course, fully legalize cannabis at the federal level as well. Period.
Of course, once the black market is dead and gone, then by all means, tax away. But now is NOT the time for overtaxation or overregulation.
So what should the tax on cannabis be? To start with, we at Twenty-One Debunked believe it should be no higher that $10/ounce for bud and $2.50/ounce for trim at the production/cultivation level, with no other taxes aside from regular sales tax. Consider a three-month tax holiday as well, like Oregon did in 2015. Then, after the first year or two, the tax should be no higher than $50/ounce for bud and $15/ounce for trim, much like it is in Alaska today. As for concentrates and edibles, those are best to tax based on THC content, e.g. 1 cent/milligram of THC.
Remember, there is really no good reason why cannabis needs to be regulated any more stringently than alcohol or tobacco. After all, while it is not completely harmless for everyone, the fact remains that by just about any objective, rational, scientific measure, cannabis is safer than alcohol, tobacco, most prescription drugs, aspirin, and even Tylenol, while it is less addictive than coffee. Thus our laws and regulations need to align accurately with reality, since facts > feelings, even in a "post-truth" society.
Problem solved.
And of course, fully legalize cannabis at the federal level as well. Period.
Of course, once the black market is dead and gone, then by all means, tax away. But now is NOT the time for overtaxation or overregulation.
So what should the tax on cannabis be? To start with, we at Twenty-One Debunked believe it should be no higher that $10/ounce for bud and $2.50/ounce for trim at the production/cultivation level, with no other taxes aside from regular sales tax. Consider a three-month tax holiday as well, like Oregon did in 2015. Then, after the first year or two, the tax should be no higher than $50/ounce for bud and $15/ounce for trim, much like it is in Alaska today. As for concentrates and edibles, those are best to tax based on THC content, e.g. 1 cent/milligram of THC.
Remember, there is really no good reason why cannabis needs to be regulated any more stringently than alcohol or tobacco. After all, while it is not completely harmless for everyone, the fact remains that by just about any objective, rational, scientific measure, cannabis is safer than alcohol, tobacco, most prescription drugs, aspirin, and even Tylenol, while it is less addictive than coffee. Thus our laws and regulations need to align accurately with reality, since facts > feelings, even in a "post-truth" society.
I don't believe that legalized Cannabis should ever by more heavily taxed more than a state's sales tax. To reduce the black market, taxation should always be less rather than more. Hopefully, the minimum age to smoke Cannabis will be 18-19 in the coming years. Unfortunately, the rhetoric of leaders in the movement to legalize Cannabis have oppressive attitudes against young people. They are in sync with the general oppressive attitudes against young people in this country. An example of this is the organization named NORML.
ReplyDeleteThere is an argument to be made for having some excise tax on cannabis other than sales tax, but there is no good reason to tax it excessively or more so than alcohol or tobacco. There is a reason why no country has a VAT much greater than 25%, and yet California thinks that up to a 45% total tax on cannabis is somehow a good idea? Ridiculous. Doing so is disproportionate even by the most extreme Pigouvian perspective on externalities, and is only begging for a black market, at least at first.
ReplyDeleteAnd yes, too many leaders in the cannabis legalization movement have adopted ageist attitudes to young people. And that needs to end yesterday.
Alaska's flat $50/ounce cannabis tax is substantial too, but at least in Alaska that is the ONLY tax they have on it. They don't even have sales tax there at the state level, though some localities do. Thus, their total tax ends up being significantly lower than much of California, percentage-wise, especially for the pricier strains.
ReplyDeleteI updated this blog post to reflect Twenty-One Debunked's recommendations for the maximum tax rates on cannabis.
ReplyDeleteI know in Canada, the age to buy cannabis (along with alcohol, tobacco) isn’t higher than 19 or (18 in Alberta) because of black market concerns. 18-24 year olds are frequent users of marijuana and banning adults under 21 or 25 from buying would cause them to seek out other illicit sources. The use of cannabis is not recommended under age 25, but it’s a suggestion. It’s better for a 19-year-old to buy from a reputable dispensary then some shady dealer. Besides, if you can drink alcohol at 18/19 up there, why not smoke cannabis? Good article.
ReplyDelete