16 ms·

SF suspends cannabis tax to help dispensaries compete with drug dealers

191 points by NoRagrets 5y ago

hereforphone 5y ago
Wait I was told that when it was legalized there would be no more underground drug market. Seems things aren't as simple as they seem on the surface.
- Nursie 5y ago
  Depends on how much regulation you place around the market. According to wikipedia, most cities and counties in California have banned cannabis retail, which is just one thing likely to contribute to an ongoing black market. I imagine there are others.
- klyrs 5y ago
  This is something pot activists have complained about from the get-go. Legalization was sold to politicians with the promise of high taxes. We knew that poor users would be priced out of the market, that legal weed would be a privilege enjoyed by the rich, that dealers with criminal records would be shut out of the legal market.
  - thaumasiotes 5y ago
    > Legalization was sold to politicians with the promise of high taxes. We knew that poor users would be priced out of the market, that legal weed would be a privilege enjoyed by the rich Poor users seem to enjoy a lot of legal alcohol. Taxes on that are high too, and it's even easier to make your own alcohol than to make your own weed.
    - parineum 5y ago
      Liquor licenses and marijuana licences are very different in availability and, due to how the products are consumed (alcohol being very central to social gatherings), the necessity of having a license is more important for alcohol.
    - mandmandam 5y ago
      > it's even easier to make your own alcohol than to make your own weed. It sure as fuck isn't. There are parts of the world where putting some free seeds in the ground is sufficient.
      - kortilla 5y ago
        People make alcohol in prison toilets. That’s not really far from “throw seeds in the ground”.
        curryst 5y ago
        It's also not really safe to drink. Probably unlikely to kill you, but you're not going to get any assurances E. coli isn't in there. It's pretty hard to mess up growing weed bad enough to hurt someone, unless you poison yourself with pesticides on accident (which aren't really necessary at least at the personal scale). If something bad happens, it's almost always to the plant.
    - ramraj07 5y ago
      Sure, you can make alcohol yourself. Then you discover some batteries increase the kick. Then you realize a drop of methanol just takes it to insane levels. Then 2 drops kill or blind you.
      - buescher 5y ago
        A high proportion of the booze consumed worldwide is what the bureaucrats call "unrecorded", and poisonings are exceptional.
      - nate_meurer 5y ago
        "Two drops" of even pure methanol won't do anything to you. Not even close.
        ramraj07 5y ago
        Of course I don’t know the LD50 of methanol, but I do know it’s quite close to whatever gives you the kick.
    - boibombeiro 5y ago
      Alcohol has long shelf life, can be easily produced at large scale, etc. Selling flower buds of a plant will hardly be accessible. But the industry will eventually find a way to make a viable cannabis product from waste.
    - marcinzm 5y ago
      And historically when even more alcohol was consumed there was a massive bootleg and moonshine industry. In the end, most likely the people running it have simply died of old age and the newer generations prefers other things.
    - SamBam 5y ago
      The majority of poor people have neither the time, space, know-how, or desire to make their own alcohol or weed. But it's an awful lot easier for a dealer to sell weed to a hundred people than for them to sell bottles of alcohol to a hundred people.
      - xeromal 5y ago
        One will get you in severe trouble in a lot of states.
    - klyrs 5y ago
      This isn't a terribly apt comparison. The competition for weed is not individuals growing their own weed (which, in fact, requires land which the urban poor do not have access to), but with (a) well-established growers who have been continually operating in the black market, and (b) new legal growers and their employees who can skim some of their product for "personal use". Individuals can and do make their own alcohol -- and it's a really expensive hobby to get it right. In terms of price per unit volume, distribution of illicit alcohol is quite problematic. You can easily fit $500 of weed into 1 liter (local prices and densities vary). Retail booze is less than a tenth of that. Bad booze would be even lower. This is a substantial impediment to the risk/reward calculus for street-level sellers all the way up to producers.
  - sneak 5y ago
    The terms "white people" and "black people" don't appear in your comment, and I think they should.
    - ironmagma 5y ago
      You are wrong. One of my best friends is white and can’t afford legal weed so he buys it from unsavory sources.
      - sneak 5y ago
        My point is that the legalization of the weed business was a deliberate choice to shift revenue streams away from black people and toward white people.
        ironmagma 5y ago
        Most people who supported it said it was to get away from the deliberate imprisonment of black people who didn’t deserve criminal penalties for casual drug use. So I guess the question is, which is the worse conspiracy?
        sneak 5y ago
        The USA has a long history of taking any industry in which black people are amassing wealth, power, or status, and stealing or destroying it. You can't maintain an intelligent, hard-working group as an underclass for multiple generations without deliberate action and sabotage each and every time advances are made. It's nothing new, just the latest installment. See also: music (jazz, rock, rap, techno, motown), Tulsa, civil rights, etc. Get too big or powerful, and it'll be outlawed, stolen, or you'll simply be killed outright. This is the pattern in the USA.
        ironmagma 5y ago
        This observation still provides no solution to the catch-22 of imprisoning black people vs taking away money from black people. It seems almost like black people are just people, so deciding policies are going to be good for some and bad for others, just like every policy.
- baron816 5y ago
  From the original article: “Mandelman’s office pointed to a Dec. 19 report from the California Legislative Analyst’s Office that found that increased state cannabis tax rates were directly linked to illegal cannabis sales. In addition to the illegal sales, increased theft is also creating problems for cannabis retailers.” I’m sure other factors are that retailers have to pay rent and payroll taxes. I have no idea what the price differential is, but I could imagine it being quite significant. Making things illegal doesn’t mean it goes away. Most often, it just makes it more expensive because people are exposed to more risk from selling it. But if you don’t enforce your laws and there is no risk, then of course the legal version of it can’t compete. If the city didn’t enforce any of its awful zoning laws, housing would be super cheap.
  - genericone 5y ago
    Threat of violence is the only true currency, the final turtle at the bottom of all other currency turtles.
  - taurath 5y ago
    Another problem with dispensaries is that banks will not allow them to use them. That means they end up being cash only, and a huge target for burglaries. There is a bill passed by a huge margin in the house in April, but the senate hasn’t taken it up yet, called the SAFE Banking Act.
- throwawaylinux 5y ago
  I do believe it could eliminate most of the illegal marijuana market, but only under a government and voting population that considers reducing taxes and this kind of crime to be important priorities. It's never going to happen in a place like California, surely.
- paganel 5y ago
  There's still an underground cigarettes market in my country. It helps that we (a EU country) have a land-border with some other non-EU countries, we have very high taxes on cigarettes (compared to our revenues, at least), they don't, it's only natural that money will find a way. The authorities do announce "contraband cigarettes captures" every week or two but I'm pretty sure that's just scratching the surface. They've recently also managed to "capture" an An-2 (great plane) on its way back from a contraband run, pretty cool. [1] https://www.digi24.ro/stiri/actualitate/evenimente/un-avion-cu-tigari-de-contrabanda-din-ucraina-care-se-indrepta-spre-romania-a-fost-capturat-de-politistii-din-republica-moldova-1667139 https://www.digi24.ro/stiri/actualitate/evenimente/un-avion-...
  - dumbfoundded 5y ago
    It's not just the taxes. It's how hard it is to sell weed legally. All of the hoops and expenses add up. In Florida, it's like 20 licenses that cost $25M each. We should make it as easy as selling alcohol and then the prices will match.
    - sokoloff 5y ago
      Is your claim that it costs half a billion dollars to setup to sell weed legally in FL? That defies all order-of-magnitude estimation.
      - dumbfoundded 5y ago
        No, $25M is the open market price for a license charges a company to pick up a license. Looks like someone sold a license for much more (0). Only 22 licenses for companies in Florida have been granted (1). In Florida, companies have to vertically integrate their whole supplychain and not mix with any other cannabis company. It takes opening like 50 dispensaries under a license to break even. Florida sells $1.2B of cannabis a year & $500M in acquisitions were completed in Florida last year. (0) https://www.tampabay.com/florida-politics/buzz/2019/10/15/for-sale-two-florida-medical-marijuana-licenses-cost-95-million/ https://www.tampabay.com/florida-politics/buzz/2019/10/15/fo... (1) https://mjbizdaily.com/florida-medical-marijuana-operators-benefit-from-state-court-decision/ https://mjbizdaily.com/florida-medical-marijuana-operators-b... (2) https://mjbizdaily.com/cannabis-msos-on-buying-spree-in-florida-in-bid-to-take-on-trulieve/#:~:text=But%20with%20Florida's%20market%20now,cannabis%20law%20firm%20Vicente%20Sederberg https://mjbizdaily.com/cannabis-msos-on-buying-spree-in-flor....
- colordrops 5y ago
  It certainly reduces gang violence and fake or tainted drugs.
  - moooo99 5y ago
    But I don’t think it really reduces the amount of fake or tainted drugs, at least not for those who really suffered from the prohibition. The heavy taxation and the strict regulation of the market creates a massive cost overhead. Even the lowest quality of legally sellable weed is so expensive that it’s out of reach for poor consumers. The undergroud market may even be able to offer the same quality product for a fraction of the price, for obvious reasons of course. So many people, especially those with less financial stability, will still choose the underground market over legal options. Also, I’d assume that since the legalization, the pressure by law enforcement has dropped quite a bit, at least for consumers. This would make the underground an even more compelling choice.
  - Broken_Hippo 5y ago
    How common is fake pot, though? I mean, surely young folks try to do stupid things to other young and stupid people (fake and tainted drugs). Occasionally folks don't get the quality they expect. But all this stuff means you lose customers and you continually need new folks to dupe. "fake or tainted drugs" has always seemed like a bigger problem with different categories of drugs. Additionally, I'm not convinced it actually reduces gang violence since we still have a thriving black market.
    - tayo42 5y ago
      I think k2 shows up occasionally.
    - mandmandam 5y ago
      Nope, fake and tainted weed is a very real problem when it's illegal. I've seen cannabis with plaster mixed in; glass beads, added ketamine, synthetic fibres; anything cheap to increase the perceived effect and weight. And all of those are safer than legal synthetic 'weed'. The THC to CBD ratio is completely impossible to control when in prohibition areas. Dealers select for maximum THC to minimize weight to effect ratio, which is the opposite of what you want if you're trying to protect people from any possible psychosis trigger. People who are self medicating with cannabis in illegal countries have very little control over these factors. If they try to grow their own they can get prosecuted as suppliers and face higher sentences than rapists.
- t-3 5y ago
  How easy/legal is it to grow your own in CA? If it's very easy, the underground market will probably be entirely homegrown, and still beneficial to the local economy even without tax income. If it's hard or illegal to grow, wholesale importation from cheaper areas will continue funding criminal logistics operations, and most of the revenue will leave the area.
- tshaddox 5y ago
  It’s pretty clear that any argument of that form comes with the obvious caveat that excessive taxes or fees for the legal product wouldn’t cause the underground market to disappear. Obviously if it was “legalized” but there was a $1,000 per ounce tax, we would expect the illegal market to continue to thrive.
- pmarreck 5y ago
  It's almost like demonizing a plant was never something that should have happened in the first place.
SilasX 5y ago
Surprised to see no mention of this being a clear case of the Laffer Curve taxing past the Laffer (revenue maximizing) point.
therockspush 5y ago
Whats the price difference here? Doesn't seem worth the effort of hitting up a dealer unless you're picking up a couple other party platters.
- carabiner 5y ago
  It's in the article.
  - kelnos 5y ago
    Right, 1%-5%. But I don't think I'd care to deal with illegal product and any possible (even if unlikely) headaches around it just to save $1-$5 for every $100 spent. Seems kinda foolish. But yeah, I suppose if you're also picking up some illegal stuff, makes sense to make it a one-stop shopping trip.
    - Talanes 5y ago
      People buying from dealers aren't considering the illegality in the choice at all, though. They're a choice between continuing to buy from someone they know vs entering a storefront that is going to make them provide a bunch of PII on the first visit, which also costs more.
      - kafkaIncarnate 5y ago
        For me the price was worth it to make "the person I know" become a "person I no longer knew".
- pjbeam 5y ago
  Dealers are more likely to make house calls?
  - colechristensen 5y ago
    I don’t know, when I lived in Mountain View I could get (legal) cannabis delivered faster than pizza.
deleted 5y ago
[deleted]
baron816 5y ago
Has the city considered…uh, arresting drug dealers?
- tehjoker 5y ago
  Has the city considered finding a way to cut them into the big business that was created out of their traditional trade? Why help people go legal and regulated when you can throw them in prison?
- sieabahlpark 5y ago
  Woah, that would disproportionately affect the criminals.
- rpmisms 5y ago
  I'd like to congratulate drugs for winning the war on drugs. The surrendering party should have unconditionally surrendered, but have chosen to fight it to the grave.
  - aww_dang 5y ago
    Release all prisoners of war and pay reparations? Or just move onto the next authoritarian power grab like it never happened?
    - rpmisms 5y ago
      As more Americans of all stripes are buying firearms, it looks like a war on guns is next. I wish the bigwigs would learn....
- doktorhladnjak 5y ago
  Drug dealers should probably be more afraid of the Franchise Tax Board coming after them for non payment of state taxes
- ramesh31 5y ago
  >Has the city considered…uh, arresting drug dealers? We've been doing this for 50 years. Hasn't really worked out so far.
bryans 5y ago
In most recreational states, cannabis is taxed heavily at every step in the supply chain, so the highest quality still ends up being very expensive -- upward of $400/oz. The black market has the exact same quality at the wholesale price, typically 40-60% less than retail, with the added bonus of not having the government involved. For a daily or heavy smoker, a ~50% discount is a massive amount of money.
- dumbfoundded 5y ago
  Additionally the taxes create operational overhead to stay compliant. Every product follows a chain of custody similar to pharmaceuticals. Even the scales used must be of the same spec used for gold weighing and cost roughly $1,500 each. It's not just the dispensaries but the wholesalers, processors, and cultivators need to buy these scales and register them once a year with the state for $100. Furthermore the batches sizes are too small for the cultivators and processors. In Oregon, it was 15lbs each. An outdoor harvest may bring 1,500lbs an acre. Each test costs roughly $50 plus the labor for a human measuring it. Even if it was all going to biomass processing (think isolates and distillates used for edibles and vapes), the same process applies. Part of the reason to justify all of this regulation was to ensure that the blackmarket would update accordingly. Instead, rich investors took control of the cannabis market and the underground market thrived without enforcement pressures. Poor people who actually suffered the consequences of prohibition received none of the benefits of legalization. This issue is certainly economic and racial. Now the legal cannabis market wants to expand but can't. Now it has to compete with a market thriving due to enforcement evaporating. One way is to reduce taxes. This would make it more profitable for the already rich existing investors in cannabis to make more money. Taxes are extreme and certainly need to be reduced but the real issue is supply chain and access to market. It's really difficult to sell weed legally if you want to. More importantly, it's expensive. We should make it cheap to sell weed. You should be able to sell weed like alcohol. Alcohol licenses are much cheaper and with much larger quotas. Additionally alcohol is more standardized than cannabis while facing less supply chain inspections & requirements. There should be strong exceptions to small producers. Also, interstate sales should be allowed. Illicit markets serving out of state customers won't go legit if they can't ship across state lines. Especially to adjacent states with legalized cannabis. Isn't it crazy you can't ship weed from Oregon to Washington? Lowering the barrier to market would have the additional benefit of enabling smaller market participants like the people who did it before it was legal. I actually have no problem with very high taxes on the larger companies. Maybe it'll fund building schools and hospitals in the places ravaged by the drug war. It's a great disgrace that our laws have prevented any reasonable path for going legit while demonizing them in the process.
yosito 5y ago
It took me awhile to realize that San Francisco is not suspending a video game called CannabisTax 2.
- clintonb 5y ago
  Have you recently, or are you currently, consuming cannabis?
coding123 5y ago
Both are drug dealers... Technically.
PrinceRichard 5y ago
Drug dealers huh...interesting terminology there
kepler1 5y ago
You know, sometimes I wonder if some of the Romans, looking around at their society crumbling in the early ADs, asked themselves "you know, I remember we used to have these things called laws?" Seems we're tripping over ourselves these days to find every way to defeat the original purpose of the laws that we set up to make society civilized and fair. And I'm not just talking about weed.
- raxxorrax 5y ago
  A huge problem today is that law isn't accessible anymore. While it is good to have extensive laws to create legal security, the fundamental laws need to understood by everybody. A high court is always needed to make final decisions on basic judgments, but they must be open to interpretation by common people that aren't lawyers and there cannot be many exceptions here. If we have laws that forbid racial discrimination or surveillance and we get countless exceptions to these, the law basically becomes worthless and hollow. Laws that protect against surveillance are worthless today. The intelligence community, tasked with protecting the constitutions, is guilty of undermining these by breaking them. Legislators are guilty of undermining them by having transgressions not have consequences. Even if you have an understanding on operational compromises, we went far beyond those. So the law vanishes, it has no value anymore. It is a broken law that also underlines how there are different set of rules for different people. So people start asking why they should honor other laws when it becomes inconvenient to them.
tomohawk 5y ago
Instead, they should prosecute drug dealers for tax evasion.
primitivesuave 5y ago
I love that these small businesses are keeping more of their hard-earned money, but I don’t really think this will have any noticeable effect on their sales. As someone who exclusively purchases cannabis flower, I will only use the dispensaries when my trusted guy is out, and for only the smallest possible quantity until my guy is back up. A majority of dispensary customers are looking for cannabis-infused beverages, concentrates, and a selection of professionally-packaged products that a street dealer is simply incapable of manufacturing.
- ramraj07 5y ago
  Could you elaborate further on why you’d stick to your guy?
  - primitivesuave 5y ago
    First and foremost, we have become good friends over the years, so I enjoy the ceremony of entering his home to sit down and hang out before making a purchase. The quality has been consistently excellent over the years, even before legalization. I also sometimes get headaches from dispensary flower that I never get from this flower, which my guy attributes to the "organic" (i.e. no pesticide) grow that his source uses. I will say that I discovered cannabis-infused beverages only a few months ago, and they are the most compelling alternative to flower for both me and everyone I've talked to.
    - raxxorrax 5y ago
      Could be the ingredients but headaches from weed are most often caused by chlorophyll which didn't break down yet. In case you get it, it might help to leave the weed in a jar for two weeks, it may still be too fresh. After that it should be broken down. Not a smoker anymore, but I wish there would be "weed light". Weed today is so massively overbred that it contains massive amounts of THC or CBD or both. It would be nice to have some form of jazz cigarette that induces a subtle high instead of making you not want to move ever again and gets you close to a psychotic breakdown. The stuff of today isn't comparable to what the hippies smoked in the 60s and I would say it can be quite dangerous. Also a lot of users get addicted to tobacco instead of the high of weed but will always smoke weed when they have the urge to smoke.
Thorentis 5y ago
Well I guess the "but the tax revenue could go to health care" thing didn't work out so well did it?
- danieldisu 5y ago
  Well, I'm sure that even without that tax, the government will still receive more money than before plus all the money not spent in prisons, law enforcement and all that jazz. I think this also should be something that other governments should take into account when taxing the newly legalized cannabis business, if you tax it too heavily from day one you may be pushing clients both clients and producers to the black market.
kvgr 5y ago
One of the arguments why cannabis is illegal is that is hard to tax compared to alcohol. Well, turns out to be true.
swayvil 5y ago
Here in Illinois. Weed became legal at suspiciously the same time that opiates became... 1) more difficult to get due to changes in various regulations. 2) heavily propagandized against. This is obviously an attempt to shift a big revenue stream from the pharmacorps to a new pie. That new pie is divided between the state (licensing fees, taxes) and whoever can get permission to grow and sell (Governor Pritzker and his cronies). It's all about money.
- deleted 5y ago
  [deleted]
- Synaesthesia 5y ago
  Good because Opiates are a bit out of control and can be deadly.
  - you-liquidated 5y ago
    All drugs should be legal, and sold at the grocery store or pharmacy. If people want opiates, they should be able to easily have it. Also, we have the technology to make most drugs as cheap as soda. There is no reason they should be expensive and out of reach of poor people.
1cvmask 5y ago
Rules, regulations and arduous compliance measures are an indirect tax on businesses. It would be good if policymakers saw it as such.
RickJWagner 5y ago
People hate to pay taxes. We see it here and everywhere.
specialist 5y ago
Yes and (Adjacently): Dispensaries also need access to basic financial services. Like merchant bank accounts. In my jurisdiction, dispensaries are still cash only. Because of federal law, banks won't touch weed money. (Ironic, given how many have laundered cartel monies.) IIRC, there's been security problems. Like stick-up robberies. Which increases risks and costs (more security). I know people working on weed policy. Harmonizing all the laws up and down the legal stack. Totally not my issue, so please correct me. -- My throwaway crazy uninformed idea: Merge the marijuana and state-run bank policy advocacy. So that dispensaries (et al) have a safe, convenient alternative to handling cash. Aha. WA State Rep Hasegawa proposed this policy in 2014. https://cannabisnow.com/washington-state-could-manage-marijuana-commerce-using-state-run-banking/ https://cannabisnow.com/washington-state-could-manage-mariju... Hasegawa is a great guy. So I'm probably repeating an idea I heard during some presentation (and not being original). Any way. SanFran should create their own bank for their own small businesses, including dispensaries. Edit: Maybe even just start their own credit union. Like a union of local small businesses. Sponsored by the local chamber of commerce and partially underwritten by the city. Totally spitballing here; I have zero knowledge about this stuff. Sorry. I no idea about the current status of state-run banking, in WA, CA, or else where. In general terms and in principle, I support anything that takes power away from commercial, publicly traded banks.
- agency 5y ago
  Yeah it's weird, at my dispensary in WA they do have some setup where you can pay with a (debit) card but in addition to a $3 service fee they also for some reason have to round up to the nearest multiple of $5 and give you cash back.
  - genocidicbunny 5y ago
    The fees and rounding are because in a roundabout way, they're still just using cash. They just have a portable ATM terminal -- if you check your transactions it will probably show up as an ATM withdrawal. That's also why they also only accept debit cards.
- gumby 5y ago
ramesh31 5y ago
Should be noted that this is just the city tax, which MMJ patients already were exempt from. You still have to pay the 25% state tax.
djKianoosh 5y ago
I'm kinda serious, why not use a crypto invoicing service? Seems like an actual use case to not have to rely on traditional banking.
gumby 5y ago
I had a vacation house up in Calaveras county (in the sierras). After pot was legalized in California, a country referendum question banned growing pot in that largely agricultural county (“You wouldn’t want that stuff growing next to your vineyard!”). The question, and almost all of its advertising, was funded by illegal growers who didn’t want the competition.
xyzzy21 5y ago
Given that it's 9:1 illegal to legal in the SF Bay Area, even this tax break might now be enough to matter. It's already lower risk and high profit to sell illegally rather than legally.
poulsbohemian 5y ago
As someone who doesn't use cannabis, can someone explain to me why there continues to be an underground? Saw an article in news a couple weeks ago explaining that there are problems in Oregon again with unlicensed producers in wilderness areas again. One of the primary reasons I was in favor of legalization was that I didn't like the prospects of running into an illegal grow operation when I'm out enjoying Mother Nature. Is it just a matter of economics, IE: the underground, untaxed producers are so much cheaper that there's still an active market?
- jerrysievert 5y ago
  not every county in Oregon has legal ways to purchase, some counties want the tax revenue but don't want people to be able to get it. taxation across every aspect of growing, processing, and sale adds a lot. not all dispensaries are the same, some are swank, but more expensive, some are captive markets. some people don't want to be tracked in any way. so there are reasons some people stick with black market, but like piracy, making legal purchases and consumption easier helps to ease it.
  - poulsbohemian 5y ago
    This is good feedback... I knew there were places like Pendleton and the southeastern corner of the state that were still be sticks in the mud, but didn't really think in terms of that being a reason for a black market to continue to thrive (given access in so many places in WA, OR, CA in general)

191 points by NoRagrets 5y ago

Wait I was told that when it was legalized there would be no more underground drug market. Seems things aren't as simple as they seem on the surface.

Nursie 5y ago
Depends on how much regulation you place around the market. According to wikipedia, most cities and counties in California have banned cannabis retail, which is just one thing likely to contribute to an ongoing black market. I imagine there are others.
klyrs 5y ago
This is something pot activists have complained about from the get-go. Legalization was sold to politicians with the promise of high taxes. We knew that poor users would be priced out of the market, that legal weed would be a privilege enjoyed by the rich, that dealers with criminal records would be shut out of the legal market.
- thaumasiotes 5y ago
  > Legalization was sold to politicians with the promise of high taxes. We knew that poor users would be priced out of the market, that legal weed would be a privilege enjoyed by the rich Poor users seem to enjoy a lot of legal alcohol. Taxes on that are high too, and it's even easier to make your own alcohol than to make your own weed.
  - parineum 5y ago
    Liquor licenses and marijuana licences are very different in availability and, due to how the products are consumed (alcohol being very central to social gatherings), the necessity of having a license is more important for alcohol.
  - mandmandam 5y ago
    > it's even easier to make your own alcohol than to make your own weed. It sure as fuck isn't. There are parts of the world where putting some free seeds in the ground is sufficient.
    - kortilla 5y ago
      People make alcohol in prison toilets. That’s not really far from “throw seeds in the ground”.
      - curryst 5y ago
        It's also not really safe to drink. Probably unlikely to kill you, but you're not going to get any assurances E. coli isn't in there. It's pretty hard to mess up growing weed bad enough to hurt someone, unless you poison yourself with pesticides on accident (which aren't really necessary at least at the personal scale). If something bad happens, it's almost always to the plant.
  - ramraj07 5y ago
    Sure, you can make alcohol yourself. Then you discover some batteries increase the kick. Then you realize a drop of methanol just takes it to insane levels. Then 2 drops kill or blind you.
    - buescher 5y ago
      A high proportion of the booze consumed worldwide is what the bureaucrats call "unrecorded", and poisonings are exceptional.
    - nate_meurer 5y ago
      "Two drops" of even pure methanol won't do anything to you. Not even close.
      - ramraj07 5y ago
        Of course I don’t know the LD50 of methanol, but I do know it’s quite close to whatever gives you the kick.
  - boibombeiro 5y ago
    Alcohol has long shelf life, can be easily produced at large scale, etc. Selling flower buds of a plant will hardly be accessible. But the industry will eventually find a way to make a viable cannabis product from waste.
  - marcinzm 5y ago
    And historically when even more alcohol was consumed there was a massive bootleg and moonshine industry. In the end, most likely the people running it have simply died of old age and the newer generations prefers other things.
  - SamBam 5y ago
    The majority of poor people have neither the time, space, know-how, or desire to make their own alcohol or weed. But it's an awful lot easier for a dealer to sell weed to a hundred people than for them to sell bottles of alcohol to a hundred people.
    - xeromal 5y ago
      One will get you in severe trouble in a lot of states.
  - klyrs 5y ago
    This isn't a terribly apt comparison. The competition for weed is not individuals growing their own weed (which, in fact, requires land which the urban poor do not have access to), but with (a) well-established growers who have been continually operating in the black market, and (b) new legal growers and their employees who can skim some of their product for "personal use". Individuals can and do make their own alcohol -- and it's a really expensive hobby to get it right. In terms of price per unit volume, distribution of illicit alcohol is quite problematic. You can easily fit $500 of weed into 1 liter (local prices and densities vary). Retail booze is less than a tenth of that. Bad booze would be even lower. This is a substantial impediment to the risk/reward calculus for street-level sellers all the way up to producers.
- sneak 5y ago
  The terms "white people" and "black people" don't appear in your comment, and I think they should.
  - ironmagma 5y ago
    You are wrong. One of my best friends is white and can’t afford legal weed so he buys it from unsavory sources.
    - sneak 5y ago
      My point is that the legalization of the weed business was a deliberate choice to shift revenue streams away from black people and toward white people.
      - ironmagma 5y ago
        Most people who supported it said it was to get away from the deliberate imprisonment of black people who didn’t deserve criminal penalties for casual drug use. So I guess the question is, which is the worse conspiracy?
        sneak 5y ago
        The USA has a long history of taking any industry in which black people are amassing wealth, power, or status, and stealing or destroying it. You can't maintain an intelligent, hard-working group as an underclass for multiple generations without deliberate action and sabotage each and every time advances are made. It's nothing new, just the latest installment. See also: music (jazz, rock, rap, techno, motown), Tulsa, civil rights, etc. Get too big or powerful, and it'll be outlawed, stolen, or you'll simply be killed outright. This is the pattern in the USA.
        ironmagma 5y ago
        This observation still provides no solution to the catch-22 of imprisoning black people vs taking away money from black people. It seems almost like black people are just people, so deciding policies are going to be good for some and bad for others, just like every policy.
baron816 5y ago
From the original article: “Mandelman’s office pointed to a Dec. 19 report from the California Legislative Analyst’s Office that found that increased state cannabis tax rates were directly linked to illegal cannabis sales. In addition to the illegal sales, increased theft is also creating problems for cannabis retailers.” I’m sure other factors are that retailers have to pay rent and payroll taxes. I have no idea what the price differential is, but I could imagine it being quite significant. Making things illegal doesn’t mean it goes away. Most often, it just makes it more expensive because people are exposed to more risk from selling it. But if you don’t enforce your laws and there is no risk, then of course the legal version of it can’t compete. If the city didn’t enforce any of its awful zoning laws, housing would be super cheap.
- genericone 5y ago
  Threat of violence is the only true currency, the final turtle at the bottom of all other currency turtles.
- taurath 5y ago
  Another problem with dispensaries is that banks will not allow them to use them. That means they end up being cash only, and a huge target for burglaries. There is a bill passed by a huge margin in the house in April, but the senate hasn’t taken it up yet, called the SAFE Banking Act.
throwawaylinux 5y ago
I do believe it could eliminate most of the illegal marijuana market, but only under a government and voting population that considers reducing taxes and this kind of crime to be important priorities. It's never going to happen in a place like California, surely.
paganel 5y ago
There's still an underground cigarettes market in my country. It helps that we (a EU country) have a land-border with some other non-EU countries, we have very high taxes on cigarettes (compared to our revenues, at least), they don't, it's only natural that money will find a way. The authorities do announce "contraband cigarettes captures" every week or two but I'm pretty sure that's just scratching the surface. They've recently also managed to "capture" an An-2 (great plane) on its way back from a contraband run, pretty cool. [1] https://www.digi24.ro/stiri/actualitate/evenimente/un-avion-cu-tigari-de-contrabanda-din-ucraina-care-se-indrepta-spre-romania-a-fost-capturat-de-politistii-din-republica-moldova-1667139 https://www.digi24.ro/stiri/actualitate/evenimente/un-avion-...
- dumbfoundded 5y ago
  It's not just the taxes. It's how hard it is to sell weed legally. All of the hoops and expenses add up. In Florida, it's like 20 licenses that cost $25M each. We should make it as easy as selling alcohol and then the prices will match.
  - sokoloff 5y ago
    Is your claim that it costs half a billion dollars to setup to sell weed legally in FL? That defies all order-of-magnitude estimation.
    - dumbfoundded 5y ago
      No, $25M is the open market price for a license charges a company to pick up a license. Looks like someone sold a license for much more (0). Only 22 licenses for companies in Florida have been granted (1). In Florida, companies have to vertically integrate their whole supplychain and not mix with any other cannabis company. It takes opening like 50 dispensaries under a license to break even. Florida sells $1.2B of cannabis a year & $500M in acquisitions were completed in Florida last year. (0) https://www.tampabay.com/florida-politics/buzz/2019/10/15/for-sale-two-florida-medical-marijuana-licenses-cost-95-million/ https://www.tampabay.com/florida-politics/buzz/2019/10/15/fo... (1) https://mjbizdaily.com/florida-medical-marijuana-operators-benefit-from-state-court-decision/ https://mjbizdaily.com/florida-medical-marijuana-operators-b... (2) https://mjbizdaily.com/cannabis-msos-on-buying-spree-in-florida-in-bid-to-take-on-trulieve/#:~:text=But%20with%20Florida's%20market%20now,cannabis%20law%20firm%20Vicente%20Sederberg https://mjbizdaily.com/cannabis-msos-on-buying-spree-in-flor....
colordrops 5y ago
It certainly reduces gang violence and fake or tainted drugs.
- moooo99 5y ago
  But I don’t think it really reduces the amount of fake or tainted drugs, at least not for those who really suffered from the prohibition. The heavy taxation and the strict regulation of the market creates a massive cost overhead. Even the lowest quality of legally sellable weed is so expensive that it’s out of reach for poor consumers. The undergroud market may even be able to offer the same quality product for a fraction of the price, for obvious reasons of course. So many people, especially those with less financial stability, will still choose the underground market over legal options. Also, I’d assume that since the legalization, the pressure by law enforcement has dropped quite a bit, at least for consumers. This would make the underground an even more compelling choice.
- Broken_Hippo 5y ago
  How common is fake pot, though? I mean, surely young folks try to do stupid things to other young and stupid people (fake and tainted drugs). Occasionally folks don't get the quality they expect. But all this stuff means you lose customers and you continually need new folks to dupe. "fake or tainted drugs" has always seemed like a bigger problem with different categories of drugs. Additionally, I'm not convinced it actually reduces gang violence since we still have a thriving black market.
  - tayo42 5y ago
    I think k2 shows up occasionally.
  - mandmandam 5y ago
    Nope, fake and tainted weed is a very real problem when it's illegal. I've seen cannabis with plaster mixed in; glass beads, added ketamine, synthetic fibres; anything cheap to increase the perceived effect and weight. And all of those are safer than legal synthetic 'weed'. The THC to CBD ratio is completely impossible to control when in prohibition areas. Dealers select for maximum THC to minimize weight to effect ratio, which is the opposite of what you want if you're trying to protect people from any possible psychosis trigger. People who are self medicating with cannabis in illegal countries have very little control over these factors. If they try to grow their own they can get prosecuted as suppliers and face higher sentences than rapists.
t-3 5y ago
How easy/legal is it to grow your own in CA? If it's very easy, the underground market will probably be entirely homegrown, and still beneficial to the local economy even without tax income. If it's hard or illegal to grow, wholesale importation from cheaper areas will continue funding criminal logistics operations, and most of the revenue will leave the area.
tshaddox 5y ago
It’s pretty clear that any argument of that form comes with the obvious caveat that excessive taxes or fees for the legal product wouldn’t cause the underground market to disappear. Obviously if it was “legalized” but there was a $1,000 per ounce tax, we would expect the illegal market to continue to thrive.
pmarreck 5y ago
It's almost like demonizing a plant was never something that should have happened in the first place.

SilasX 5y ago

Surprised to see no mention of this being a clear case of the Laffer Curve taxing past the Laffer (revenue maximizing) point.

therockspush 5y ago

Whats the price difference here? Doesn't seem worth the effort of hitting up a dealer unless you're picking up a couple other party platters.

carabiner 5y ago
It's in the article.
- kelnos 5y ago
  Right, 1%-5%. But I don't think I'd care to deal with illegal product and any possible (even if unlikely) headaches around it just to save $1-$5 for every $100 spent. Seems kinda foolish. But yeah, I suppose if you're also picking up some illegal stuff, makes sense to make it a one-stop shopping trip.
  - Talanes 5y ago
    People buying from dealers aren't considering the illegality in the choice at all, though. They're a choice between continuing to buy from someone they know vs entering a storefront that is going to make them provide a bunch of PII on the first visit, which also costs more.
    - kafkaIncarnate 5y ago
      For me the price was worth it to make "the person I know" become a "person I no longer knew".
pjbeam 5y ago
Dealers are more likely to make house calls?
- colechristensen 5y ago
  I don’t know, when I lived in Mountain View I could get (legal) cannabis delivered faster than pizza.

deleted 5y ago

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baron816 5y ago

Has the city considered…uh, arresting drug dealers?

tehjoker 5y ago
Has the city considered finding a way to cut them into the big business that was created out of their traditional trade? Why help people go legal and regulated when you can throw them in prison?
sieabahlpark 5y ago
Woah, that would disproportionately affect the criminals.
rpmisms 5y ago
I'd like to congratulate drugs for winning the war on drugs. The surrendering party should have unconditionally surrendered, but have chosen to fight it to the grave.
- aww_dang 5y ago
  Release all prisoners of war and pay reparations? Or just move onto the next authoritarian power grab like it never happened?
  - rpmisms 5y ago
    As more Americans of all stripes are buying firearms, it looks like a war on guns is next. I wish the bigwigs would learn....
doktorhladnjak 5y ago
Drug dealers should probably be more afraid of the Franchise Tax Board coming after them for non payment of state taxes
ramesh31 5y ago
>Has the city considered…uh, arresting drug dealers? We've been doing this for 50 years. Hasn't really worked out so far.

bryans 5y ago

In most recreational states, cannabis is taxed heavily at every step in the supply chain, so the highest quality still ends up being very expensive -- upward of $400/oz. The black market has the exact same quality at the wholesale price, typically 40-60% less than retail, with the added bonus of not having the government involved. For a daily or heavy smoker, a ~50% discount is a massive amount of money.

dumbfoundded 5y ago
Additionally the taxes create operational overhead to stay compliant. Every product follows a chain of custody similar to pharmaceuticals. Even the scales used must be of the same spec used for gold weighing and cost roughly $1,500 each. It's not just the dispensaries but the wholesalers, processors, and cultivators need to buy these scales and register them once a year with the state for $100. Furthermore the batches sizes are too small for the cultivators and processors. In Oregon, it was 15lbs each. An outdoor harvest may bring 1,500lbs an acre. Each test costs roughly $50 plus the labor for a human measuring it. Even if it was all going to biomass processing (think isolates and distillates used for edibles and vapes), the same process applies. Part of the reason to justify all of this regulation was to ensure that the blackmarket would update accordingly. Instead, rich investors took control of the cannabis market and the underground market thrived without enforcement pressures. Poor people who actually suffered the consequences of prohibition received none of the benefits of legalization. This issue is certainly economic and racial. Now the legal cannabis market wants to expand but can't. Now it has to compete with a market thriving due to enforcement evaporating. One way is to reduce taxes. This would make it more profitable for the already rich existing investors in cannabis to make more money. Taxes are extreme and certainly need to be reduced but the real issue is supply chain and access to market. It's really difficult to sell weed legally if you want to. More importantly, it's expensive. We should make it cheap to sell weed. You should be able to sell weed like alcohol. Alcohol licenses are much cheaper and with much larger quotas. Additionally alcohol is more standardized than cannabis while facing less supply chain inspections & requirements. There should be strong exceptions to small producers. Also, interstate sales should be allowed. Illicit markets serving out of state customers won't go legit if they can't ship across state lines. Especially to adjacent states with legalized cannabis. Isn't it crazy you can't ship weed from Oregon to Washington? Lowering the barrier to market would have the additional benefit of enabling smaller market participants like the people who did it before it was legal. I actually have no problem with very high taxes on the larger companies. Maybe it'll fund building schools and hospitals in the places ravaged by the drug war. It's a great disgrace that our laws have prevented any reasonable path for going legit while demonizing them in the process.

yosito 5y ago

It took me awhile to realize that San Francisco is not suspending a video game called CannabisTax 2.

clintonb 5y ago
Have you recently, or are you currently, consuming cannabis?

coding123 5y ago

Both are drug dealers... Technically.

PrinceRichard 5y ago

Drug dealers huh...interesting terminology there

kepler1 5y ago

You know, sometimes I wonder if some of the Romans, looking around at their society crumbling in the early ADs, asked themselves "you know, I remember we used to have these things called laws?" Seems we're tripping over ourselves these days to find every way to defeat the original purpose of the laws that we set up to make society civilized and fair. And I'm not just talking about weed.

raxxorrax 5y ago
A huge problem today is that law isn't accessible anymore. While it is good to have extensive laws to create legal security, the fundamental laws need to understood by everybody. A high court is always needed to make final decisions on basic judgments, but they must be open to interpretation by common people that aren't lawyers and there cannot be many exceptions here. If we have laws that forbid racial discrimination or surveillance and we get countless exceptions to these, the law basically becomes worthless and hollow. Laws that protect against surveillance are worthless today. The intelligence community, tasked with protecting the constitutions, is guilty of undermining these by breaking them. Legislators are guilty of undermining them by having transgressions not have consequences. Even if you have an understanding on operational compromises, we went far beyond those. So the law vanishes, it has no value anymore. It is a broken law that also underlines how there are different set of rules for different people. So people start asking why they should honor other laws when it becomes inconvenient to them.

tomohawk 5y ago

Instead, they should prosecute drug dealers for tax evasion.

primitivesuave 5y ago

I love that these small businesses are keeping more of their hard-earned money, but I don’t really think this will have any noticeable effect on their sales. As someone who exclusively purchases cannabis flower, I will only use the dispensaries when my trusted guy is out, and for only the smallest possible quantity until my guy is back up. A majority of dispensary customers are looking for cannabis-infused beverages, concentrates, and a selection of professionally-packaged products that a street dealer is simply incapable of manufacturing.

ramraj07 5y ago
Could you elaborate further on why you’d stick to your guy?
- primitivesuave 5y ago
  First and foremost, we have become good friends over the years, so I enjoy the ceremony of entering his home to sit down and hang out before making a purchase. The quality has been consistently excellent over the years, even before legalization. I also sometimes get headaches from dispensary flower that I never get from this flower, which my guy attributes to the "organic" (i.e. no pesticide) grow that his source uses. I will say that I discovered cannabis-infused beverages only a few months ago, and they are the most compelling alternative to flower for both me and everyone I've talked to.
  - raxxorrax 5y ago
    Could be the ingredients but headaches from weed are most often caused by chlorophyll which didn't break down yet. In case you get it, it might help to leave the weed in a jar for two weeks, it may still be too fresh. After that it should be broken down. Not a smoker anymore, but I wish there would be "weed light". Weed today is so massively overbred that it contains massive amounts of THC or CBD or both. It would be nice to have some form of jazz cigarette that induces a subtle high instead of making you not want to move ever again and gets you close to a psychotic breakdown. The stuff of today isn't comparable to what the hippies smoked in the 60s and I would say it can be quite dangerous. Also a lot of users get addicted to tobacco instead of the high of weed but will always smoke weed when they have the urge to smoke.

Thorentis 5y ago

Well I guess the "but the tax revenue could go to health care" thing didn't work out so well did it?

danieldisu 5y ago
Well, I'm sure that even without that tax, the government will still receive more money than before plus all the money not spent in prisons, law enforcement and all that jazz. I think this also should be something that other governments should take into account when taxing the newly legalized cannabis business, if you tax it too heavily from day one you may be pushing clients both clients and producers to the black market.

kvgr 5y ago

One of the arguments why cannabis is illegal is that is hard to tax compared to alcohol. Well, turns out to be true.

swayvil 5y ago

Here in Illinois. Weed became legal at suspiciously the same time that opiates became... 1) more difficult to get due to changes in various regulations. 2) heavily propagandized against. This is obviously an attempt to shift a big revenue stream from the pharmacorps to a new pie. That new pie is divided between the state (licensing fees, taxes) and whoever can get permission to grow and sell (Governor Pritzker and his cronies). It's all about money.

deleted 5y ago
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Synaesthesia 5y ago
Good because Opiates are a bit out of control and can be deadly.
- you-liquidated 5y ago
  All drugs should be legal, and sold at the grocery store or pharmacy. If people want opiates, they should be able to easily have it. Also, we have the technology to make most drugs as cheap as soda. There is no reason they should be expensive and out of reach of poor people.

1cvmask 5y ago

Rules, regulations and arduous compliance measures are an indirect tax on businesses. It would be good if policymakers saw it as such.

RickJWagner 5y ago

People hate to pay taxes. We see it here and everywhere.

specialist 5y ago

Yes and (Adjacently): Dispensaries also need access to basic financial services. Like merchant bank accounts. In my jurisdiction, dispensaries are still cash only. Because of federal law, banks won't touch weed money. (Ironic, given how many have laundered cartel monies.) IIRC, there's been security problems. Like stick-up robberies. Which increases risks and costs (more security). I know people working on weed policy. Harmonizing all the laws up and down the legal stack. Totally not my issue, so please correct me. -- My throwaway crazy uninformed idea: Merge the marijuana and state-run bank policy advocacy. So that dispensaries (et al) have a safe, convenient alternative to handling cash. Aha. WA State Rep Hasegawa proposed this policy in 2014. https://cannabisnow.com/washington-state-could-manage-marijuana-commerce-using-state-run-banking/ https://cannabisnow.com/washington-state-could-manage-mariju... Hasegawa is a great guy. So I'm probably repeating an idea I heard during some presentation (and not being original). Any way. SanFran should create their own bank for their own small businesses, including dispensaries. Edit: Maybe even just start their own credit union. Like a union of local small businesses. Sponsored by the local chamber of commerce and partially underwritten by the city. Totally spitballing here; I have zero knowledge about this stuff. Sorry. I no idea about the current status of state-run banking, in WA, CA, or else where. In general terms and in principle, I support anything that takes power away from commercial, publicly traded banks.

agency 5y ago
Yeah it's weird, at my dispensary in WA they do have some setup where you can pay with a (debit) card but in addition to a $3 service fee they also for some reason have to round up to the nearest multiple of $5 and give you cash back.
- genocidicbunny 5y ago
  The fees and rounding are because in a roundabout way, they're still just using cash. They just have a portable ATM terminal -- if you check your transactions it will probably show up as an ATM withdrawal. That's also why they also only accept debit cards.
gumby 5y ago

ramesh31 5y ago

Should be noted that this is just the city tax, which MMJ patients already were exempt from. You still have to pay the 25% state tax.

djKianoosh 5y ago

I'm kinda serious, why not use a crypto invoicing service? Seems like an actual use case to not have to rely on traditional banking.

gumby 5y ago

I had a vacation house up in Calaveras county (in the sierras). After pot was legalized in California, a country referendum question banned growing pot in that largely agricultural county (“You wouldn’t want that stuff growing next to your vineyard!”). The question, and almost all of its advertising, was funded by illegal growers who didn’t want the competition.

xyzzy21 5y ago

Given that it's 9:1 illegal to legal in the SF Bay Area, even this tax break might now be enough to matter. It's already lower risk and high profit to sell illegally rather than legally.

poulsbohemian 5y ago

As someone who doesn't use cannabis, can someone explain to me why there continues to be an underground? Saw an article in news a couple weeks ago explaining that there are problems in Oregon again with unlicensed producers in wilderness areas again. One of the primary reasons I was in favor of legalization was that I didn't like the prospects of running into an illegal grow operation when I'm out enjoying Mother Nature. Is it just a matter of economics, IE: the underground, untaxed producers are so much cheaper that there's still an active market?

jerrysievert 5y ago
not every county in Oregon has legal ways to purchase, some counties want the tax revenue but don't want people to be able to get it. taxation across every aspect of growing, processing, and sale adds a lot. not all dispensaries are the same, some are swank, but more expensive, some are captive markets. some people don't want to be tracked in any way. so there are reasons some people stick with black market, but like piracy, making legal purchases and consumption easier helps to ease it.
- poulsbohemian 5y ago
  This is good feedback... I knew there were places like Pendleton and the southeastern corner of the state that were still be sticks in the mud, but didn't really think in terms of that being a reason for a black market to continue to thrive (given access in so many places in WA, OR, CA in general)