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Thread: Cash-Starved States Eye Pot Tax

  1. #1
    420 Member Truth Seeker's Avatar
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    Cash-Starved States Eye Pot Tax

    Now that voters in Colorado and Washington have legalized recreational marijuana use, dope smokers there can light up without the usual paranoid fear that the cops are at the door.

    The taxman is another matter.

    Cash-starved legislators are seeing dollar signs in dime bags — with talk that a tax on marijuana could pump hundreds of millions or even billions into budgets still reeling from the recession.

    “I’ve seen some estimates in the high tens of millions, as much as $100 million for [Colorado],” said Rep. Jared Polis (D-Colo.), who’s pushing a federal legalization in Congress. Money like that could make a big difference, he said — including a “substantial dent in needed school improvements, particularly in poorer districts.”

    It’s long been a central argument of the pro-marijuana crowd: Get marijuana out of the hands of dope dealers, tax it like you do cigarettes, then sit back and watch the money pour in.

    “We all know where the money from nonmedical marijuana sales is currently going,” said a narrator in a Colorado campaign ad from last year, nodding to Mexico. "It doesn't need to be that way. If we pass Amendment 64, Colorado businesses would profit, and tax revenues would pay for public services and the reconstruction of our schools."

    Dale Gieringer, director of California National Organization for the Reform of Marijuana Laws, estimates that legalizing pot would bring in at least $1.2 billion to his state alone. His study assumes a traditional sales tax plus an additional $50 levy per ounce of marijuana, which runs between $280 and $420.

    His study argues that legalization could also generate $12 billion to $18 billion in new economic activity for California.

    The skeptics’ response: What are you smoking?

    “This is not a cash cow that can solve anyone’s fiscal problems,” said Harvard economics professor Jeffrey Miron, a pro-legalization scholar at the libertarian Cato Institute who says Gieringer’s numbers are roughly three times what they should be.

    “There is a lot of exaggeration about how big the revenue can be.”

    Advocates “want to be allowed to smoke in peace,” Miron said. But, they’re “nervous about making that argument. They’re afraid that argument won’t win the day, so they have focused in many cases on the revenue side.”

    Miron estimates that a nationwide legalization that taxed marijuana like alcohol and tobacco would mean $6.4 billion in new tax revenue — $4.3 billion for Uncle Sam and $2.1 billion for the states.

    The estimates are necessarily hazy. No one knows how much marijuana is bought and sold today, let alone how legalization will affect consumption and prices.

    “When you go to legalize, you have reduced risk in producing and distributing the drug. That’s a real component of the monetary price of marijuana,” said Rosalie Liccardo Pacula, the co-director of the RAND Drug Policy Research Center.

    She expects prices to fall by 70 to 85 percent in both Colorado and Washington — and that means taxes, if levied as a percentage of price or value, will also fall considerably.

    But she acknowledges that it’s hard to know for sure.

    “You have to know more about the structure of the demand curve, which we don’t have any data on because this is black-market; it’s all conjecture,” Liccardo Pacula said.

    And even lawmakers looking to cash in know they’ve got to be careful. Tax marijuana too much and it drives users right back to illegal dealers. Nobody knows what that price point is.

    “You want to make sure the black market doesn’t have an advantage over the regulated market because if it does, then the whole concept fails and people will continue to buy marijuana illegally — so there has to be a price advance for the legal market,” Polis said.

    News Hawk- Truth Seeker 420 MAGAZINE ®
    Author: Rachael Bade
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    Website: Cash-starved states eye pot tax - Rachael Bade -

  2. #2
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    Re: Cash-Starved States Eye Pot Tax

    This conversation needs a new catch phrase such as "net taxpayer benefit."

    All the talk is about the taxation of cannabis, and from the sound of it some politicians will have marijuana users paying Canadian liquor prices. You might be legal, but you'll just be trading one dealer for another.

    So let's rebuild rotting infrastructure with those marijuana tax dollars -- and write into law that that revenue can only be a percentage of what governments (federal, state or in the eventual case of Canada, provincial) cut from police drug units, prosecutors/the courts and prisons. It's probably fair to say that the bulk of the taxpayer money directed towards such law enforcement currently targets marijuana and its users. At the same time, the taxation of marijuana can't be expected to foot the bill for new schools and roads, etc. But the transparent combination of taxation dollars and the reduction of taxpayer dollars directed towards marijuana law enforcement would go a long ways towards those infrastructure needs.

    Undoubtedly politicians are excited - regardless of what face they're wearing in the current debate - about a new tax revenue stream. But along with their law enforcement counterparts, they'll be loath to give up bloated enforcement budgets. States legalizing marijuana -- now and in the near future -- will be setting precedents for the rest of the western world. As the second paragraph in this article suggests, the taxman could end up being the bigger boogeyman.

  3. #3
    420 Member Bonehead's Avatar
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    Jan 2009
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    Re: Cash-Starved States Eye Pot Tax

    They need to stop sending people to jail then we can work out the other details.
    Common Sense Is Not All That Common

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