4 ms·

Why not just heavily tax marijuana? That seems like a more reasonable and targeted way to raise money from this change.

josefresco 9y ago
Because if you "heavily tax" cannabis, it will expand or prop up the already existing black market. This is something that towns, eager to tax recreational cannabis shops exorbitant amounts, will soon realize.
- oxide 9y ago
  hopefully sooner rather than later. when we said "regulate and tax it" for decades, we didn't mean give the blackmarket a greater marketshare by making the taxes exorbitant. People are going to buy weed, if the taxes make it not worth purchasing legally the blackmarket will always be there to undercut it. you have to COMPETE with blackmarket prices, you can't just jack up prices, legalize it and then expect people to stop paying $25 for 3.5 grams of top-tier marijuana. no one is going to continually pay $75 for 3.5 grams, especially after the novelty has worn off. If you have a who buddy will sell you the same amount of equal or higher quality for a 1/3rd of the price, would you pay 2/3rds more? If cities add more tax on top of state tax, then it'll push more medical and recreational users right back into the untaxed newly formed gray market. Same with cities who don't open shops. I think this is a result of being blinded by dollar signs instead of practical and thought-through policy. Yes, it'll still rake in tax dollars and yes, people who don't know any better will buy from shops, like tourists. But for the target market? I'm not so sure.
  - beager 9y ago
    What sort of black markets currently exist to evade taxation for consumer goods currently, that threaten the existence of that legalized and taxed industry? The only thing I can think of is cigarettes, and even then, the taxation is extremely high and the legal market is still very strong. I don't think that high taxation is going to derail a legal market, but I'm willing to be proven wrong.
    - oxide 9y ago
      sorry, I didn't mean to imply it would derail or threaten the existence of it. Like I said, money is going to be made by the state hand over fist just from tourism. But for your regular person who's made due without a legal marijuana distribution network isn't going to start paying a premium on the regular for the privilege of retail. It's mostly a novelty, IMO, and may increase graymarket demand for untaxed marijuana for everyone BUT the people looking to do some weed tourism, etc.
    - will_hughes 9y ago
      > What sort of black markets currently exist to evade taxation for consumer goods currently I don't know about the US, but in Australia where cigarettes are heavily taxed (one packet of cigarettes can go for AUD$30) there's a small but pretty active market for imported untaxed cigarettes.
- namlem 9y ago
  That's exactly why they don't want to legalize home cultivation. In Mass the back market is booming because everyone can grow it.
  - josefresco 9y ago
    The law in Mass, and how it's rolled out has had unintended consequences: 1. Home cultivation is legal (and not controlled by local officials), and therefore the "black" market is booming / prices are dropping. 2. Municipalities are blocking recreational cannabis businesses, in many cases instituting "moratoriums" for 1-2 years to "allow the state legal framework to be hammered out" (which is complete BS) This helps the black market further. 3. Furthermore, the shops that are allowed are heavily regulated and taxed, further helping the black market price advantage. Until recreational cannabis businesses are open and thriving, the black market will continue to surge, and probably hasn't even peaked.

Because if you "heavily tax" cannabis, it will expand or prop up the already existing black market. This is something that towns, eager to tax recreational cannabis shops exorbitant amounts, will soon realize.

oxide 9y ago
hopefully sooner rather than later. when we said "regulate and tax it" for decades, we didn't mean give the blackmarket a greater marketshare by making the taxes exorbitant. People are going to buy weed, if the taxes make it not worth purchasing legally the blackmarket will always be there to undercut it. you have to COMPETE with blackmarket prices, you can't just jack up prices, legalize it and then expect people to stop paying $25 for 3.5 grams of top-tier marijuana. no one is going to continually pay $75 for 3.5 grams, especially after the novelty has worn off. If you have a who buddy will sell you the same amount of equal or higher quality for a 1/3rd of the price, would you pay 2/3rds more? If cities add more tax on top of state tax, then it'll push more medical and recreational users right back into the untaxed newly formed gray market. Same with cities who don't open shops. I think this is a result of being blinded by dollar signs instead of practical and thought-through policy. Yes, it'll still rake in tax dollars and yes, people who don't know any better will buy from shops, like tourists. But for the target market? I'm not so sure.
- beager 9y ago
  What sort of black markets currently exist to evade taxation for consumer goods currently, that threaten the existence of that legalized and taxed industry? The only thing I can think of is cigarettes, and even then, the taxation is extremely high and the legal market is still very strong. I don't think that high taxation is going to derail a legal market, but I'm willing to be proven wrong.
  - oxide 9y ago
    sorry, I didn't mean to imply it would derail or threaten the existence of it. Like I said, money is going to be made by the state hand over fist just from tourism. But for your regular person who's made due without a legal marijuana distribution network isn't going to start paying a premium on the regular for the privilege of retail. It's mostly a novelty, IMO, and may increase graymarket demand for untaxed marijuana for everyone BUT the people looking to do some weed tourism, etc.
  - will_hughes 9y ago
    > What sort of black markets currently exist to evade taxation for consumer goods currently I don't know about the US, but in Australia where cigarettes are heavily taxed (one packet of cigarettes can go for AUD$30) there's a small but pretty active market for imported untaxed cigarettes.
namlem 9y ago
That's exactly why they don't want to legalize home cultivation. In Mass the back market is booming because everyone can grow it.
- josefresco 9y ago
  The law in Mass, and how it's rolled out has had unintended consequences: 1. Home cultivation is legal (and not controlled by local officials), and therefore the "black" market is booming / prices are dropping. 2. Municipalities are blocking recreational cannabis businesses, in many cases instituting "moratoriums" for 1-2 years to "allow the state legal framework to be hammered out" (which is complete BS) This helps the black market further. 3. Furthermore, the shops that are allowed are heavily regulated and taxed, further helping the black market price advantage. Until recreational cannabis businesses are open and thriving, the black market will continue to surge, and probably hasn't even peaked.