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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