I have to laugh at the current mess in the California marijuana "industry". Citizens there voted to legalize marijuana, and the state set up a structured "industry" - complete with taxes, etc. Trouble is, they taxed it too heavily.
Two and a half centuries after the Boston Tea Party, legal cannabis operators say it might be time for a California Weed Party.
But rather than dump their agricultural product into the Pacific Ocean, shop owners and others are floating the idea of withholding their state tax payments. This year, that could add up to $1.3 billion.
The goal is to express frustration with the state of the industry in California, where legal cannabis merchants struggle to compete with illicit operators who have a huge price advantage specifically because they don’t follow the rules.
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Since voters opted to regulate cannabis in 2016, all products legally sold in California have come with a 15 percent excise tax. Cultivators also pay a tax based on the weight of what they sell, which in turn bumps up the retail price. Then there’s regular state sales tax, which typically runs between 8 and 10 percent. Plus, cities and counties that allow marijuana businesses typically tack on local cannabis taxes, which can reach as high as 15%.
It all adds up to an effective tax rate for California cannabis businesses that can easily top 45%.
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But, to date, the high tax rate — and the revenues collected — have done little to level the playing field. California’s underground cannabis business is estimated to be twice as big as the legal side of the industry.
And the legal operators suffer because the costs of following the rules inevitably get passed along to consumers, exacerbating the price gap between legal and illegal cannabis. Products sold from underground shops and hustlers with backpacks often cost half as much as the products sold in Kiloh’s licensed L.A. store, he grudgingly acknowledges.
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That daunting outlook might be why the legal side of the industry is shrinking. In 2018, there were roughly 16,000 licenses for cannabis businesses in California, a figure that by 2020 had fallen to about 10,000 licenses, according to an analysis earlier this year by the Legislative Analyst’s Office.
Some of those operators surely left the state or industry entirely. But Kiloh said he personally knows many who simply returned to an unregulated industry that’s thrived since Californians became the first in the nation to loosely legalize medical marijuana in 1996.
There's more at the link.
Everybody keeps piling on with new taxes, too. San Francisco has just been forced to suspend its local marijuana tax for a year because of the proliferation of unlicensed weed. Legal shops there can't cope with their lower-priced illegal competition, and the new tax would have made it even worse.
The states where marijuana is legal have also become major supply points for the states where it isn't. US 287 is a highway that runs down from the Canadian border, through Colorado, into northern Texas, where it makes a sharp left turn at Amarillo and cuts down to Dallas/Fort Worth. Drug dealers there are constantly trying to ship carloads of weed from Colorado (where it's relatively cheap compared to local prices) to DFW. I doubt a week goes by without Miss D. and/or myself seeing an old, rusted pickup truck or van, or a U-haul or Penske or Budget rent-a-truck, pulled over on Highway 287, with a couple of cop cars (state troopers, sheriff's deputies or town police) enthusiastically rooting through it. They usually find what they're looking for.
Legalizing marijuana doesn't make things better. It's like the many places that have legalized prostitution over the years. Very often the increased regulation, medical examinations and certifications, etc. that have accompanied legalization meant increased prices to pay for them. Therefore, many prostitutes continued to ply their trade illegally, rather than accept the expense and additional hassle of jumping through the necessary hoops to obtain a permit. A lot of places tried to tax prostitutes' income, with a predictable lack of success. As one Dutch newspaper famously observed, "What are they going to do - install a parking meter next to the bed, charging customers according to the time spent there?"
Laws against immorality simply don't work - just like preaching against immorality. In the latter case, it's important to remind people what's right and what's not in one's system of belief, but whether or not they'll comply is up to them. Those who want to do the right thing will do it. Those who don't want to, won't.
It's like the poster put up outside an evangelical church in London, England some years ago. It read: "Brother, if you're tired of sin, step inside!" It didn't take long at all for someone to add underneath, in bold black marker ink, "If you're not, call this number!" So much for morality . . .