4 ms·

California legalized weed 5 years ago, but illicit market still thrives

22 points by samizdis 5y ago

PragmaticPulp 5y ago
> Businesses frequently pay an effective tax rate of 70%, in part because they are breaking federal law and therefore aren’t able to take tax deductions, but also because politicians see the industry as a source of tax revenue and set higher rates Massive taxation on legal dispensaries combined with relatively lax enforcement of illegal distribution is, of course, going to make the legal operations a tough sell. What I didn’t realize is that some of these illegal dispensaries are apparently operating out in the open, out of actual storefronts according to this article. If enforcement is that lax and the legal route is taxed to an extreme then the outcome isn’t really surprising.
foolzcrow 5y ago
No one wants Philip Morris cannibis. They want microbrew from their friends. Black market is a lie. They wanted the law to back off, not to enshrine corporate pot.
ProjectArcturis 5y ago
Back 20 years ago, the line from legalization advocates was, "Legalize it, and tax the hell out of it." But now that it's legal it's just so much easier to grow and sell mass quantities because law enforcement doesn't care anymore. I think the only way around this is to have dedicated tax enforcement agents whose mission it is to track down illicit weed.
- DaveExeter 5y ago
  Or maybe just eliminate the taxes? That would save a lot in enforcement costs.
  - Bayart 5y ago
    What's the healthcare situation like in California ? Because if it's normal at all, in the end the tax-payer will have to pay for the cancer treatments of weed-smokers.
- bell-cot 5y ago
  Don't they already have a whole dedicated tax enforcement agency or few, making sure that merchants pay the state the Sales Tax, Fuel Tax, Bottle Deposits, Cigarette Tax, etc., ad nauseum that is owed?
  - johncearls 5y ago
    I believe the enforcement is federal (ATF). I'd imagine until the fed legalizes it, the process will be messy. You would have to recreate the ATF in each state. ATF also has some pretty sweeping powers that may be tough to replicate (legally) on a state by state basis.
    - dragonwriter 5y ago
      > I believe the enforcement is federal (ATF). It is not. The Feds, if they legalized could put federal enforcement there, or somewhere else. In California, enforcement is in the Department of Cannabis Control. > ATF also has some pretty sweeping powers that may be tough to replicate (legally) on a state by state basis. Because the federal government is mote Constitutionally restrained than state governments and has a Constitution that is more difficult to change, its much easier to create state agencies with sweeping powers (within the state) than federal ones.
- mindslight 5y ago
  That was the line from the small fraction of boot licking legalization advocates, wanting to make a Faustian bargain with the state. The "way around this" is to get government the hell out of judging what people choose to put in our own bodies, period. Healthcare is an ongoing mess in large part due to this type of paternalistic intermediation. Oh, you need painkillers? Well you'd better not make that too apparent and instead let the overly egotistical doctor think they've figured it out all by themselves - lest they instead decide that you're engaging in "drug seeking behavior".
anonymousnotme 5y ago
One problem is that cannabis is still not legal at the federal level. One can't buy legal cannabis product anonymously in CA at any of the legal stores and they keep track of what you buy as far as I know. So, feds can easily get a court order to get all transactions, then charge/arrest all customers. I wanted to try some in pill or tincture form for health reasons, but decided not to because of this. I understand that one needs to prove one's age at the door, not sure why they need to track whether and what one purchased. If I buy alcohol at the store, I don't get asked for ID (I am more than 42 years old) or if when I see peopled asked for ID, the store does not record the name and so forth. Also, think about potential identity theft if all of the front one one's ID is copied...
_fat_santa 5y ago
Leave it to California to fuck up an industry with regulation. Seems that leadership wants to have their cake and eat it too. You can either destroy the illicit market or you can make insane amount of money off regulation, pick one. Destroying the illicit market will require making dispensaries competitive with illicit shops so taxes and other regulations will have to come way way down. California seems to have chosen the latter option of just making a ton of tax revenue off the industry rather than using the industry as a way to crush the illicit market. No one in the legislature must have taken economics or they must have a "Dan Btlzerian" outlook on business, because all they seem to want to do is milk the industry for everything it's worth. Pretty soon they are going to have neither, because the solution was crushed under the weight of everyone wanting to have their hand in the pie and take their share. California leadership is still under the delusion that they can just keep taking and taking from this industry but somehow that industry will still stay afloat and thrive.

22 points by samizdis 5y ago

> Businesses frequently pay an effective tax rate of 70%, in part because they are breaking federal law and therefore aren’t able to take tax deductions, but also because politicians see the industry as a source of tax revenue and set higher rates Massive taxation on legal dispensaries combined with relatively lax enforcement of illegal distribution is, of course, going to make the legal operations a tough sell. What I didn’t realize is that some of these illegal dispensaries are apparently operating out in the open, out of actual storefronts according to this article. If enforcement is that lax and the legal route is taxed to an extreme then the outcome isn’t really surprising.

foolzcrow 5y ago

No one wants Philip Morris cannibis. They want microbrew from their friends. Black market is a lie. They wanted the law to back off, not to enshrine corporate pot.

ProjectArcturis 5y ago

Back 20 years ago, the line from legalization advocates was, "Legalize it, and tax the hell out of it." But now that it's legal it's just so much easier to grow and sell mass quantities because law enforcement doesn't care anymore. I think the only way around this is to have dedicated tax enforcement agents whose mission it is to track down illicit weed.

DaveExeter 5y ago
Or maybe just eliminate the taxes? That would save a lot in enforcement costs.
- Bayart 5y ago
  What's the healthcare situation like in California ? Because if it's normal at all, in the end the tax-payer will have to pay for the cancer treatments of weed-smokers.
bell-cot 5y ago
Don't they already have a whole dedicated tax enforcement agency or few, making sure that merchants pay the state the Sales Tax, Fuel Tax, Bottle Deposits, Cigarette Tax, etc., ad nauseum that is owed?
- johncearls 5y ago
  I believe the enforcement is federal (ATF). I'd imagine until the fed legalizes it, the process will be messy. You would have to recreate the ATF in each state. ATF also has some pretty sweeping powers that may be tough to replicate (legally) on a state by state basis.
  - dragonwriter 5y ago
    > I believe the enforcement is federal (ATF). It is not. The Feds, if they legalized could put federal enforcement there, or somewhere else. In California, enforcement is in the Department of Cannabis Control. > ATF also has some pretty sweeping powers that may be tough to replicate (legally) on a state by state basis. Because the federal government is mote Constitutionally restrained than state governments and has a Constitution that is more difficult to change, its much easier to create state agencies with sweeping powers (within the state) than federal ones.
mindslight 5y ago
That was the line from the small fraction of boot licking legalization advocates, wanting to make a Faustian bargain with the state. The "way around this" is to get government the hell out of judging what people choose to put in our own bodies, period. Healthcare is an ongoing mess in large part due to this type of paternalistic intermediation. Oh, you need painkillers? Well you'd better not make that too apparent and instead let the overly egotistical doctor think they've figured it out all by themselves - lest they instead decide that you're engaging in "drug seeking behavior".

anonymousnotme 5y ago

One problem is that cannabis is still not legal at the federal level. One can't buy legal cannabis product anonymously in CA at any of the legal stores and they keep track of what you buy as far as I know. So, feds can easily get a court order to get all transactions, then charge/arrest all customers. I wanted to try some in pill or tincture form for health reasons, but decided not to because of this. I understand that one needs to prove one's age at the door, not sure why they need to track whether and what one purchased. If I buy alcohol at the store, I don't get asked for ID (I am more than 42 years old) or if when I see peopled asked for ID, the store does not record the name and so forth. Also, think about potential identity theft if all of the front one one's ID is copied...

_fat_santa 5y ago

Leave it to California to fuck up an industry with regulation. Seems that leadership wants to have their cake and eat it too. You can either destroy the illicit market or you can make insane amount of money off regulation, pick one. Destroying the illicit market will require making dispensaries competitive with illicit shops so taxes and other regulations will have to come way way down. California seems to have chosen the latter option of just making a ton of tax revenue off the industry rather than using the industry as a way to crush the illicit market. No one in the legislature must have taken economics or they must have a "Dan Btlzerian" outlook on business, because all they seem to want to do is milk the industry for everything it's worth. Pretty soon they are going to have neither, because the solution was crushed under the weight of everyone wanting to have their hand in the pie and take their share. California leadership is still under the delusion that they can just keep taking and taking from this industry but somehow that industry will still stay afloat and thrive.