Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

Current Events & Hot Topics Current Events & Hot Topics

High Marijuana Taxes Could Derail Legalization Plans

Posted by on Oct. 19, 2013 at 7:28 PM
  • 44 Replies

High Marijuana Taxes Could Derail Legalization Plans

Forbes

 

When Congress banned marijuana in 1937, it did so in the guise of taxation, imposing a prohibitive levy on cannabis and created criminal penalties for those who failed to pay it. Marijuana taxes also played a prominent role in what may be the beginning of the end for pot prohibition: the legalization measures that voters in Colorado and Washington approved last fall.

 

Supporters of Washington’s I-502 and Colorado’s Amendment 64 emphasized the revenue that the government could reap by recognizing cannabis production and distribution as a legitimate business. The tricky part, as officials in both states will soon discover, is balancing the desire for tax revenue against the desire to eliminate the black market created by prohibition. Or as UCLA drug policy expert Mark Kleiman, an adviser to Washington’s marijuana regulators, puts it: “What if we gave a pot legalization and nobody came?”

 

The dilemma is especially clear in Washington, where I-502 specified a 25 percent excise tax at three levels: sales between producers and processors, between processors and retailers, and between retailers and consumers. That’s in addition to the standard state sales tax of 8.75 percent.

 

According to calculations by BOTEC, Kleiman’s consulting firm, these taxes will make the retail cost of cannabis 58 percent higher than it would otherwise be, accounting for 37 percent of the price paid by consumers. One BOTEC projection, based on a production cost of $2 per gram, indicates the after-tax retail price will be $17 per gram, or $482 per ounce. Another projection, based on a production cost of $3 per gram, puts the retail price at $25.50 per gram, or $723 per ounce.

 

That’s a lot more than pot smokers in Washington currently pay. According to the website Price of Weed, which collects reports from marijuana consumers across the country, the average price for high-quality cannabis in Washington is $239 per ounce.

 

Some of those purchases may be from medical marijuana dispensaries, which are not explicitly authorized by state law but operate as patient and provider cooperatives. Washington’s medical marijuana rules are relatively permissive, allowing cultivation and possession by patients with a wide variety of conditions, as long as they have a doctor’s recommendation. Dispensaries in Seattle currently charge $250 or so per ounce, and medical marijuana sales remain untaxed under I-502.

 

In short, BOTEC’s projections indicate that the after-tax price for marijuana sold by state-licensed outlets will be something like two to three times as high as prices charged by black-market dealers or dispensaries. “That’s a big problem,” Kleiman says. “The legal market is going to have a hard time competing with the illegal market, but a particularly hard time competing with the untaxed, unregulated sort-of-legal market.”

 

Colorado’s constitution, unlike Washington’s, requires separate voter approval for new taxes. The price of legal marijuana in Colorado therefore will depend on the fate of Proposition AA, an initiative on next month’s ballot that would authorize not only the 15 percent excise tax mentioned in Amendment 64 but also a special sales tax of up to 15 percent. That’s on top of the standard state and local sales taxes, which in Denver total 8 percent. Meanwhile, voters in Denver, where most pot stores will be located, will decide whether to approve an additional municipal marijuana tax of up to 15 percent.

 

Supporters of the marijuana taxes, including Amendment 64 co-author Brian Vicente and the Medical Marijuana Industry Group, argue that they are necessary to fund an effective regulatory system, which in turn will help discourage federal interference. Opponents, led by Rob Corry, a Denver attorney and longtime marijuana activist, argue that excessively high taxes will undermine regulation by preserving the black market. “Over-taxation creates a marijuana market ripe for takeover by the unregulated, untaxed, underground market,” Corry says.

 

The Proposition AA campaign deems that prospect “unlikely,” saying “the combined taxes on retail marijuana sales will add about 22 percent to the retail cost of marijuana products”—less than half the impact of Washington’s taxes. That estimate does not include local taxes, which could make a big difference given Denver’s important role in the marijuana industry.

 

Washington and Colorado legislators will have the power to adjust tax rates. But they may be tempted to keep taxes high in the hope of generating more revenue, even when reducing rates might actually boost revenue by allowing licensed sellers to attract more business. The backers of hefty marijuana taxes are putting a lot of trust in legislators’ ability to anticipate unintended consequences and learn from experience—skills that do not come naturally to politicians.

by on Oct. 19, 2013 at 7:28 PM
Add your quick reply below:
You must be a member to reply to this post.
Replies (1-10):
pvtjokerus
by Platinum Member on Oct. 19, 2013 at 7:30 PM

High taxes and of course the Mexican Cartels could hurt sales for those that desperately want another illegal drug legalized.

meriana
by Platinum Member on Oct. 19, 2013 at 7:49 PM

People constantly pointed to regulating and taxing it as a means of bringing revenue into the state and getting rid of the "street" dealers but what they really wanted was no regulation and no (or very low) taxes. Those pro pot legalization have complained about every "rule" that has been thought of, discussed and or set up. People are simply going to continue to buy from the "street" dealer they've been buying from; grow their own (and possibly sell it  while claiming it to be for personal use only); or find a doctor willing to give them a prescription so they can avoid the tax.

DSamuels
by Gold Member on Oct. 19, 2013 at 8:06 PM

But no one tries to avoid paying taxes, do they? 

Waiting to see what the "legalize and tax it" people have to say.

Quoting meriana:

People constantly pointed to regulating and taxing it as a means of bringing revenue into the state and getting rid of the "street" dealers but what they really wanted was no regulation and no (or very low) taxes. Those pro pot legalization have complained about every "rule" that has been thought of, discussed and or set up. People are simply going to continue to buy from the "street" dealer they've been buying from; grow their own (and possibly sell it  while claiming it to be for personal use only); or find a doctor willing to give them a prescription so they can avoid the tax.


meriana
by Platinum Member on Oct. 19, 2013 at 8:30 PM

Quoting DSamuels:

But no one tries to avoid paying taxes, do they? 

Waiting to see what the "legalize and tax it" people have to say.

Quoting meriana:

People constantly pointed to regulating and taxing it as a means of bringing revenue into the state and getting rid of the "street" dealers but what they really wanted was no regulation and no (or very low) taxes. Those pro pot legalization have complained about every "rule" that has been thought of, discussed and or set up. People are simply going to continue to buy from the "street" dealer they've been buying from; grow their own (and possibly sell it  while claiming it to be for personal use only); or find a doctor willing to give them a prescription so they can avoid the tax.



It'll be interesting. Since prescription medicine isn't taxed in this state, I wouldn't be surprised if the next argument they come up with goes along the lines of it being unfair and discriminatory to apply a tax just because it's not needed medicinally.
DSamuels
by Gold Member on Oct. 19, 2013 at 8:42 PM


Quoting meriana:


Quoting DSamuels:

But no one tries to avoid paying taxes, do they? 

Waiting to see what the "legalize and tax it" people have to say.

Quoting meriana:

People constantly pointed to regulating and taxing it as a means of bringing revenue into the state and getting rid of the "street" dealers but what they really wanted was no regulation and no (or very low) taxes. Those pro pot legalization have complained about every "rule" that has been thought of, discussed and or set up. People are simply going to continue to buy from the "street" dealer they've been buying from; grow their own (and possibly sell it  while claiming it to be for personal use only); or find a doctor willing to give them a prescription so they can avoid the tax.



It'll be interesting. Since prescription medicine isn't taxed in this state, I wouldn't be surprised if the next argument they come up with goes along the lines of it being unfair and discriminatory to apply a tax just because it's not needed medicinally.

I saw an article the other day where Colorado is trying to come up with some law about the drifting of pot smoke into other people's yards. Yeah, good luck with that!

DSamuels
by Gold Member on Oct. 19, 2013 at 8:44 PM

This will interesting if it passes!

(Reuters) - The use of recreational marijuana is now legal in Colorado, but if a proposed ordinance becomes law in the state's largest city, pot smokers could face jail time and fines if smoke wafts onto a neighbor's property.

A measure under consideration by the Denver City Council would impose up to $999 in fines and a maximum one-year jail sentence for anyone caught smoking marijuana in city parks or other public venues.

But as written, the law would extend the same criminal sanctions to offenders on private property.

"The term 'openly' means occurring in a manner that is unconcealed, undisguised, is obvious, and is observable, perceptible through sight or smell to the public, or to persons on neighboring properties," the draft ordinance reads.

Last fall, Colorado and Washington became the first U.S. states to legalize the possession and use of small amounts of pot for recreational purposes.

Marijuana is classified as an illegal narcotic under federal law. But the U.S. Justice Department has said federal law enforcement will not target users in the two states if they are in compliance with their respective state's laws.

Colorado lawmakers have crafted statewide rules governing the retail sales of cannabis, but the open use of marijuana is missing under the regulations, said Amber Miller, spokeswoman for Denver Mayor Michael Hancock, who supports the measure.

"The taxing, licensing and regulation have all been addressed, but this was one aspect that hasn't been," she said.

The Colorado chapter of the American Civil Liberties Union was quick to blast the proposal, calling it "ill-advised, unnecessary and unconstitutional."

Mark Silverstein, the ACLU's legal director in Colorado, said when voters approved legalizing marijuana, it was under the understanding that it would be regulated like alcohol.

"No one risks a year in jail for drinking a beer in their fenced backyard, yet this ordinance would make criminals once again of persons who enjoy a legal joint on their back porch, if anyone can see or smell (it) from a public area or a nearby property," he said.

But the mayor said all the measure would do is clarify where people can consume marijuana.

"This proposed ordinance clearly communicates what our residents and visitors are and are not allowed to do in public," Hancock said in a statement. "It also ensures that our public spaces remain enjoyable for residents, families and tourists."

The proposal will be debated next week before a Denver City Council committee tasked with implementing new pot laws.

http://www.reuters.com/article/2013/10/11/us-usa-marijuana-colorado-idUSBRE99A11A20131011

survivorinohio
by René on Oct. 19, 2013 at 8:45 PM
1 mom liked this

Those prices are crazy. How would it cost 2 dollars a gram to produce? A good plant can yield up to 5 lbs. At those prices they are trying to say that a plant would cost  almost 900 to grow and sell???


DSamuels
by Gold Member on Oct. 19, 2013 at 8:48 PM

We'll add in overhead, paying people, inspectors, I'm sure it will have some kind of inspection, etc and the price goes way up.

Quoting survivorinohio:

Those prices are crazy. How would it cost 2 dollars a gram to produce? A good plant can yield up to 5 lbs. At those prices they are trying to say that a plant would cost  almost 900 to grow and sell???



Donna6503
by Platinum Member on Oct. 19, 2013 at 8:48 PM
Are they going to tax MJ at the same rate for those that use MJ for medical reasons with those that use it for recreational reasons?
Posted on CafeMom Mobile
meriana
by Platinum Member on Oct. 19, 2013 at 8:56 PM
1 mom liked this

Quoting DSamuels:

This will interesting if it passes!

(Reuters) - The use of recreational marijuana is now legal in Colorado, but if a proposed ordinance becomes law in the state's largest city, pot smokers could face jail time and fines if smoke wafts onto a neighbor's property.

A measure under consideration by the Denver City Council would impose up to $999 in fines and a maximum one-year jail sentence for anyone caught smoking marijuana in city parks or other public venues.

But as written, the law would extend the same criminal sanctions to offenders on private property.

"The term 'openly' means occurring in a manner that is unconcealed, undisguised, is obvious, and is observable, perceptible through sight or smell to the public, or to persons on neighboring properties," the draft ordinance reads.

Last fall, Colorado and Washington became the first U.S. states to legalize the possession and use of small amounts of pot for recreational purposes.

Marijuana is classified as an illegal narcotic under federal law. But the U.S. Justice Department has said federal law enforcement will not target users in the two states if they are in compliance with their respective state's laws.

Colorado lawmakers have crafted statewide rules governing the retail sales of cannabis, but the open use of marijuana is missing under the regulations, said Amber Miller, spokeswoman for Denver Mayor Michael Hancock, who supports the measure.

"The taxing, licensing and regulation have all been addressed, but this was one aspect that hasn't been," she said.

The Colorado chapter of the American Civil Liberties Union was quick to blast the proposal, calling it "ill-advised, unnecessary and unconstitutional."

Mark Silverstein, the ACLU's legal director in Colorado, said when voters approved legalizing marijuana, it was under the understanding that it would be regulated like alcohol.

"No one risks a year in jail for drinking a beer in their fenced backyard, yet this ordinance would make criminals once again of persons who enjoy a legal joint on their back porch, if anyone can see or smell (it) from a public area or a nearby property," he said.

But the mayor said all the measure would do is clarify where people can consume marijuana.

"This proposed ordinance clearly communicates what our residents and visitors are and are not allowed to do in public," Hancock said in a statement. "It also ensures that our public spaces remain enjoyable for residents, families and tourists."

The proposal will be debated next week before a Denver City Council committee tasked with implementing new pot laws.

http://www.reuters.com/article/2013/10/11/us-usa-marijuana-colorado-idUSBRE99A11A20131011


Yes it will. I can certainly see it being banned anywhere that cigarette smoking is banned and it seems to me that there have been apt buildings that have banned cigarette smoking on patio's, etc. because it drifts. (I wouldn't want to go into my backyard and end up smelling MJ being smoked or inhaled by my neighbor. One more reason I'm glad I don't have neighbors). There are a lot of pot smokers who really feel they should be able to light up anywhere, anytime they want. Like I said, all the stuff about regulating and taxing it was a smoke screen and not what they really wanted at all.
Add your quick reply below:
You must be a member to reply to this post.
Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

close Join now to connect to
other members!
Connect with Facebook or Sign Up Using Email

Already Joined? LOG IN