Legal and Taxable Marijuana a boon for Black Market Drug Trade in Colorado

Posted by PITHOCRATES - April 21st, 2014

Week in Review

This past Easter we saw a pot celebration in Denver.  Gathering in a central Denver park to smoke marijuana in public.  Even though doing so is still against the law.  Despite Colorado having decriminalized recreational marijuana.  Not exactly the image Colorado may have wanted.  But they may not mind a little pot tourism.  Especially to buy from their licensed pot shops.  Where pot smokers will pay a hefty tax on their legal marijuana purchases.  Eliminating the illegal drug trade.  And burying the treasury in new tax revenue (see Will Home Grown Marijuana Go the Way of Moonshine? by Caitlin Dickson posted 2/1/2014 on The Daily Beast).

I’d been in the Mile High City a total of 20 minutes before my local friend shattered the image I’d built in my head of a post-Jan. 1 Denver. She is a pot smoker. Why was she not one of the thousands of people I’d seen on TV, waiting in lines that poured out the doors of Denver’s retail marijuana shops? If not on New Year’s Day (that’s not really her style), then at least once in the weeks following the stores’ legal opening?

“I just get my weed from my friend Dave,” she said. “Most of my friends do…”

Maintaining a home grow is as expensive, if not more expensive, as setting one up. Dave says his monthly electricity bill jumps to roughly $600 in the summer, when he has to turn up the air conditioning to keep his plants from wilting, on top of the high cost of constantly running one high-voltage light for every six of his 36 plants (12 more than his red card permits). But the money Dave has put into building his basement greenhouse is nothing compared to the green his plants brings in. The 26-year-old—who now runs the grow by himself—says he makes between $40,000 and $60,000 per year selling his weed. It’s more than enough to live on for only about five to 10 hours worth of work per week.

To clarify, Dave’s livelihood is not legal…

Dave’s risk has yielded extremely lucrative rewards, and doesn’t show signs of slowing down, as his clientele of peers would unsurprisingly prefer to pay $20 to $30 for an eighth of an ounce than the $60 to $80 retail stores are charging. In fact, the dispensaries’ high prices (Colorado charges a 10 percent excess tax on all retail marijuana sales, on top of which Denver tacks a special 3.5 percent pot tax in addition to the general city and state retail taxes of 7.5 percent) are enough to motivate any thrifty green thumb try their hand at growing.

So decriminalizing marijuana does not get rid of the drug black market.  In fact, it has made the black market more lucrative.  As taxes raise the price of legally sold pot it makes black market pot much more attractive to recreational users.  In fact, the higher the taxes the better it will be for the black market drug dealers.  Just like cigarette smuggling into cities with high cigarette taxes is a very lucrative black market business.  As high taxes are a black marketeer’s best friend.

So decriminalizing marijuana won’t be everything they thought it would be.  For the higher cost of legal pot may attract another black marketeer.  From south of the border.  Mexico.  So Colorado may get some more tax revenue.  But they’re going to have to spend a lot of it on battling the same things they were battling when marijuana was still illegal.  With one other problem.  A state full of recreational pot smokers smoking a lot of pot.  And these recreational pot smokers will cause a lot of brain damage that will cost Colorado dearly in health care costs in the years to come.

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It will be Easier and as Expensive to Smoke Marijuana in Colorado than Regular Cigarettes

Posted by PITHOCRATES - March 10th, 2013

Week in Review

The stoners, the high school and college kids and the baby boomer-hippies of yesteryear are ecstatic about Colorado decriminalizing marijuana.  For now they don’t have to sneak around and buy their weed from some shady drug dealer.  No, today they can walk down the road any time and walk into Harry’s and hold their head up high and say in a loud steady voice, “Harry, I want you to sell me some marijuana.  In fact, today I think I’ll have some Acapulco Gold, for I am a Coloradan.  But people in other states?  They cannot.  Because their states have never made the great leap out of the Middle Ages and the domination of alien Episcopal supremacy.”

(Okay, so I borrowed a little from Monty Python’s The Meaning of Life.  And by a little I mean a lot.  From the scene where the Protestant goes on about being able to buy condoms unlike his Catholic neighbors.  You can see a clip of that scene here but be warned.  It is not appropriate for the workplace.  And not suitable for young children.  If you’re not a man-boy with a somewhat sophisticated yet sophomoric sense of humor you may find this scene somewhat offensive.  But if you are go and buy the two-disc collector’s edition for your personal collection.  So you, too, can impress your friends by quoting these scenes verbatim.  Or alienate everyone around you.  Depending on who your friends are.  But I digress.)

Where was I?  Oh yes, Colorado has solved all of their problems.  They’ve decriminalized marijuana so responsible adults can enjoy this drug responsibly while no kids will.  (Yeah, right.  Pull the other.)  And they’ve figured out a way to bring more money into the state treasury by encouraging people to smoke marijuana.  Even though they frown on people smoking regular cigarettes.  And pretty much banned cigarette smoking everywhere.  For that stuff can get into your lungs and kill you.  First-hand smoke.  Second-hand smoke.  Even third-hand smoke.  That ashtray smell left behind long after a smoker extinguished his or her cigarette.  So Colorado is serious about the harmful effects of smoking tobacco.  Unless it gets you high.  Then apparently the smoke isn’t that bad for you after all.  But just don’t dare light up a cigarette in public anywhere in Colorado.  But if you do, to be safe and save yourself from the judgmental stares of others just make you regular cigarette look like a marijuana joint.  And then you can light that up anywhere and everyone will be cool with you.  Apparently.

So Colorado is doing the responsible thing for responsible adults who will now all follow the letter of the law.  Even though they used to violate state and federal law before Colorado decriminalized marijuana.  Which was and still is classified as a schedule I controlled substance.  Along with heroin and cocaine.  Which carry some pretty stiff penalties if you’re caught carrying.  So these people were willing to break a law that carried stiff penalties when the drug was still illegal.  But that shouldn’t be a problem now that it’s legal (see Tax, and tax again: America’s first market for recreational marijuana will be far from free posted 3/9/2013 on The Economist).

FREE-THE-WEED campaigners speak not of “legalising” marijuana but of “taxing and regulating” it. True to their word, the ballot measure they placed before Colorado’s voters last November, which won the support of 55% of them, was called the Regulate Marijuana Like Alcohol Act and contained provisions for a 15% excise tax. Now that the law is taking shape, the signs are that one of the world’s first fully legal marijuana markets (Washington state also backed legalisation) will have all the taxes and rules anyone could have wished for…

Most importantly, the group wants to maintain, for three years, the “vertical integration” model that has governed Colorado’s medical-marijuana industry. Under this system retailers must grow at least 70% of the dope they sell. This forces licence-holders to master a suite of skills from cultivation to distribution. The task-force also suggests that for the law’s first year, only established medical-marijuana dispensaries should be granted retail licences. Some campaigners mutter about protectionism, though grudgingly admit that dispensaries deserve some reward for their pioneering (and risky) work.

Mr Finlaw admits that vertical integration makes it hard to apply the excise tax: licence-holders will have an incentive to undervalue their product. That may help explain another proposal: to slap a tax on marijuana sales, on top of existing state and local sales taxes and the proposed excise tax. No figure will be presented to the legislature, but an “example” of 25% was floated in hearings.

Regulators say they need the funds to enforce their rules. But set taxes too high, fear campaigners, and you leave the illegal market in place, which destroys one of the principal purposes of legalisation in the first place. Either way, any new taxes will have to be approved again by Colorado’s voters, probably in November.

With that level of taxation it is unlikely to make it any less expensive than the weed they used to buy.  And now that the penalty for buying ‘improper’ marijuana may be only as severe as being caught with cigarettes on you purchased in a low-tax state.  Unless you have a tractor trailer full the punishment will be a slap on the wrist.  When Canada raised their cigarette tax drug dealers turned to smuggling cigarettes.  Just as lucrative.  With far less risk.  Yes, the illegally imported marijuana may sell at a lower price than in the past but with it being legal they will be able to make up for a lower profit per sale on volume.  Because a lot more people will be smoking marijuana now.  Besides, a lot of those kids will not be able to walk into Harry’s.  They’ll still need to buy their stuff on the black market.

Over-tight rules create opportunities for and cosy relationships between the industry and regulators. But Colorado’s legislators must perform a balancing act, because they are being watched by the federal government. Marijuana remains illegal under federal law…

Some members of the prohibition industry are running out of patience. On March 5th the president of the International Narcotics Control Board, an arm of the UN, said that marijuana legalisation in America violated international treaties and threatened public health.

Ironic, really.  It’s the Left that is pushing for the decriminalization of marijuana.  Despite their relentless assault on Big Tobacco and making it pretty much illegal to smoke a regular cigarette anywhere outside your home or car.  And they’re closing in on those, too.  If you have children.  Because of that third-hand smoke.  It is also the Left that wants to keep ceding power and sovereignty to the United Nations.  And here they are.  Violating an international treaty of that august body that they hold so dear.  Go figure.

The Left is an inscrutable bunch.  With politics driving their every action.  They champion individual liberty when it comes to sex and drugs but want to put you in jail for smoking a legal cigarette.  Because smoking is bad for your health.  Unless that smoke is from marijuana.  Then it’s no big deal.  They want a big world government to pass environmental regulations they can’t pass in their own country to regulate and punish capitalism but then ask who does the UN think they are telling them they can’t violate a treaty they don’t like?  Like decriminalizing a schedule I controlled substance?

Individual liberty for those who think like them.  And oppressive and punishing regulations for those who don’t.  This is the political Left.  Which is also the way things were in an absolute monarchy.  A totalitarian fascist, Nazi or communist regime.  An Islamist theocracy.  And any other oppressive regime where those in power lived by a different set of rules than those who they ruled over.  Despite expressing equality and egalitarianism it was more times than not like life for the poor animals on George Orwell’s Animal Farm.  Where everyone was equal.  Only some were more equal than others.

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