Promoted from the Ricochet Member Feed by Editors Created with Sketch. Pot Legalization Ain’t (Tax) Consequence Free

 

Like death and taxes, you can count on the state to fumble the libertarian holy grail of recreational marijuana legalization. Take Colorado, for example.

There’s a ballot proposition (Prop BB) for next week’s election that allows the state to keep revenues from excise and sales taxes on pot, rather than having to return the excess to growers and taxpayers under Colorado’s TABOR.

Here’s a good summary of the up/down consequences from BallotPedia:

If voters approve the measure and the state keeps the money, it would be used for school construction and state programs [isn’t it always?]. If voters reject the measure, the money would be refunded by temporarily reducing the marijuana sales tax, returning funds to marijuana cultivators and the average taxpayer would receive about $8.

Now, the careless voter may say, “Hey! What’s $8 to me?” — and just vote “Yes” on BB, as is being encouraged by nearly everyone, except Grover Norquist’s Americans for Tax Reform, on the basis it’s a tax increase. What else?

But, being the conscientious type, and not buying the “tax increase” argument, I did a little digging to find out exactly what the dopers consumers are paying as the effective tax rate on this now (locally) legal product. I mean, it’s their money, right? Why should I be getting even $8 of it, if it can be used for something good like school construction?

Care to guess? You have to remember the excise tax from grower to distributor is paid by the consumer, along with a sales tax just for pot, and then whatever the local city sales tax is. Mr. C guessed 10-15 percent. He would be wrong!

According the Tax Foundation, the effective rate in Denver is 29 percent. Here’s how it adds up:

Colorado collects tax revenue from marijuana sales through a 15 percent excise based tax on the average wholesale market rate; a 10 percent state tax on retail marijuana sales; a state sales tax of 2.9 percent; varied local sales taxes; and local marijuana taxes such as a 3.5 percent tax in Denver.

For comparison, cigarette taxes run 31 percent and beer taxes about 8 percent.

This is exactly what I feared when Colorado voted to legalize recreational marijuana — the state would overtax it to the point of encouraging a black market. If people are selling loosies illegally, you better believe there’s an underground market for pot with a tax rate nearly as high as that on tobacco. All the good that might have been done by taxing pot reasonably, regulating growers and distributors, and assuring the quality of their product is now at risk.

What’s the government equivalent of Murphy’s Law? Something about, `’If the state can screw something up, it will?” Well, if you think Colorado is messing up, Washington’s effective tax rate on pot is 44 percent — although its tax on tobacco is 104 percent!

I voted for Colorado to send me $8. We can’t trust these putzes with even that much.

There are 74 comments.

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  1. captainpower Inactive

    Western Chauvinist: What’s the government equivalent of Murphy’s Law? Something about “if the state can screw up something, it will?”

    “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.” – Ronaldus Maximus, 1986

    • #1
    • October 26, 2015, at 6:27 PM PDT
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  2. Jimmy Carter Member
    Jimmy Carter Joined in the first year of Ricochet Ricochet Charter Member

    How will Y’all get the $8 back?

    If it’s a check in the mail, is $8 after accounting for the cost of the check, envelope, and postage?

    • #2
    • October 26, 2015, at 6:43 PM PDT
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  3. Western Chauvinist Member
    Western Chauvinist Joined in the first year of Ricochet Ricochet Charter Member

    Jimmy Carter:How will Y’all get the $8 back?

    If it’s a check in the mail, is $8 after accounting for the cost of the check, envelope, and postage?

    Yeah, it’s not that we get it. It’s that these maroons at the state level don’t get to keep it and they have to at least temporarily reduce the tax rate.

    • #3
    • October 26, 2015, at 6:52 PM PDT
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  4. Jimmy Carter Member
    Jimmy Carter Joined in the first year of Ricochet Ricochet Charter Member

    Gotcha.

    Always, always, always vote for the return of “excess.” If not, for whatever the government uses the money will remain forever.

    Nothing is so permanent as a temporary government program.

    • #4
    • October 26, 2015, at 7:07 PM PDT
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  5. Mike H Coolidge

    Ohio has a good chance to more or less legalize pot next month. While any taxes are of course going to allow the black market (free market?) to flourish, doing everything to allow more people to have the opportunity to decide which substances to ingest is a noble pursuit.

    Good vote, WC!

    • #5
    • October 26, 2015, at 7:54 PM PDT
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  6. Yudansha Member
    Yudansha Joined in the first year of Ricochet Ricochet Charter Member

    I already voted “NO” on both the state and city versions of this.

    • #6
    • October 26, 2015, at 8:13 PM PDT
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  7. Jason Rudert Member

    This was very much my thinking, WC. Because what is marijuana? Dried leaves. It’s just not worth that much, being a low-value-added product. The street price reflects only the danger inherent in producing it under a prohibitionist regime. The weakest argument that the legalization side had was that simultaneously revenue would pour in, and all the violent drug dealers would be put out of business. Well you can have one or the other. Any price level that would drive the cartels out will be too low to return much tax revenue to the state. They have somehow created the worst of both worlds.

    • #7
    • October 26, 2015, at 8:48 PM PDT
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  8. Western Chauvinist Member
    Western Chauvinist Joined in the first year of Ricochet Ricochet Charter Member

    Mike H: Ohio has a good chance to more or less legalize pot next month.

    One lesson I’ve taken away from Colorado’s experience is the edible pot is a YUUGE problem. Many people seem to have no clue about proper dosing. They pull a Maureen Dowd and eat a whole brownie, instead of the recommended fourth of one. Since the metabolism is so much slower than inhaling pot, they end up overdosing and hallucinating about jumping off a skyscraper. [Is it bad that I’m picturing Maureen Dowd following through? Don’t answer that.]

    I also hear that pediatric visits to the ER are way up as youngsters come across their parent’s pot-laced candy and have no idea what they’ve gotten into. I don’t know if there should be outright bans on edibles, or much stiffer penalties on parents when the kids get sick, but I wish Colorado had figured that out before legalization. Hopefully Ohio and other states will learn from our mistakes.

    • #8
    • October 26, 2015, at 9:09 PM PDT
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  9. Cat III, Nymphoid Barbarian Member

    I hate when pot legalization (or legalization of anything) is framed as a way to balance the budget. The government needs to keep a handle on its finances without searching for new sources of revenue. They’ll run out of things to legalize eventually. I also don’t want my rights contingent on giving the government something extra in return. The point about creating a black market is pertinent and gets to the heart of why libertarians and the left aren’t really natural allies even when they seem to agree.

    • #9
    • October 26, 2015, at 11:37 PM PDT
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  10. Cat III, Nymphoid Barbarian Member

    Western Chauvinist:I also hear that pediatric visits to the ER are way up as youngsters come across their parent’s pot-laced candy and have no idea what they’ve gotten into. I don’t know if there should be outright bans on edibles, or much stiffer penalties on parents when the kids get sick, but I wish Colorado had figured that out before legalization.

    This wouldn’t be inconsistent with legalization, in the same way that gun rights advocates often support punishing parents who leave guns where children can get them.

    • #10
    • October 26, 2015, at 11:42 PM PDT
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  11. Randy Webster Member

    Jimmy Carter:Gotcha.

    Always, always, always vote for the return of “excess.” If not, for whatever the government uses the money will remain forever.

    Walter Williams used to say that it would be better for the country if, at tax time, the taxpayer bundled up his tax payment and threw it into the fire.

    • #11
    • October 27, 2015, at 2:25 AM PDT
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  12. I Walton Member

    Presumably, someone here will know, the provision to return money was to avoid the incentive for the state to promote consumption of the stuff to increase revenues, like Russia with vodka. I’d go further, but then I’d do this for all currently toxic recreational chemicals. I’d make it illegal to promote the consumption of “licensed” toxic chemicals, i.e. all currently illegal narcotics. With this the business couldn’t advertise, package attractively, and individuals couldn’t give it away, or have pot parties etc. Enforceable? most of the public part, the rest only by responsible adults and parents, like now but without the disastrous consequences.

    • #12
    • October 27, 2015, at 3:19 AM PDT
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  13. Fred Cole Member

    I look forward to the day where discussions like these don’t include demonization of marihuana consumers.

    • #13
    • October 27, 2015, at 4:18 AM PDT
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  14. Tom Meyer, Common Citizen Contributor

    Western Chauvinist: This is exactly what I feared when Colorado voted to legalize recreational marijuana — the state would overtax it to the point of encouraging a black market. If people are selling loosies illegally, you better believe there’s an underground market for pot with a tax rate nearly as high as that on tobacco. All the good that might have been done by taxing pot reasonably, regulating growers and distributors, and assuring the quality of their product is now at risk.

    Very well put. Thank you for the (grim) update.

    • #14
    • October 27, 2015, at 4:40 AM PDT
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  15. Tom Meyer, Common Citizen Contributor

    Cat III:

    Western Chauvinist: I don’t know if there should be outright bans on edibles, or much stiffer penalties on parents when the kids get sick, but I wish Colorado had figured that out before legalization.

    This wouldn’t be inconsistent with legalization, in the same way that gun rights advocates often support punishing parents who leave guns where children can get them.

    Agreed. Put the punishment as close as possible to the actual harm.

    • #15
    • October 27, 2015, at 4:41 AM PDT
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  16. Western Chauvinist Member
    Western Chauvinist Joined in the first year of Ricochet Ricochet Charter Member

    Fred Cole:I look forward to the day where discussions like these don’t include demonization of marihuana consumers.

    I’m not demonizing, Fred. It’s just that “a fool and his money are soon parted.” It’s Biblical!

    I voted for Coloradans to have the freedom to do stupid things, like consume pot. I don’t have to respect them for it, either before or after legalization. I’ve had friends and neighbors be dopers. Sometimes they got away with such foolishness without personally damaging their lives. Mostly not.

    I have a friend whose brother ended up schizophrenic (may have been the pot, maybe not, but that’s not my point). My friend quit his software development job to go run the halfway house where his brother ended up. He called it the “nut” house. He wasn’t demonizing or unloving. He was dealing with these guys honestly — giving them a dose of reality they lacked.

    In fairness to the dopers, I have more respect for them than I do those dopes at the State House. At least dopers have the excuse of regularly getting intoxicated as the cause of their stupidity.

    • #16
    • October 27, 2015, at 5:27 AM PDT
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  17. iWe Reagan
    iWe Joined in the first year of Ricochet Ricochet Charter Member

    Taxing vice is not a bug – it is a feature. Of COURSE the government is going to tax it, and to the point where some percentage will go to the black market.

    • #17
    • October 27, 2015, at 5:39 AM PDT
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  18. Austin Murrey Inactive

    Fred Cole:I look forward to the day where discussions like these don’t include demonization of marihuana consumers.

    Was there someone demonizing them?

    If so I didn’t see it, although i did see WC making a point that a number of people have no idea how to properly dose marijuana in edible form. Maybe that’s anecdotal evidence, but is that false?

    • #18
    • October 27, 2015, at 5:51 AM PDT
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  19. iWe Reagan
    iWe Joined in the first year of Ricochet Ricochet Charter Member

    Fred Cole:I look forward to the day where discussions like these don’t include demonization of marihuana consumers.

    Oh, Hey. I’ll play.

    I despise mind-numbing experiential-focused time wasters like marijuana, watching sports, and daytime television. Unless, of course, the people doing those things would otherwise be engaged in externally destructive behavior.

    Happy now?

    • #19
    • October 27, 2015, at 6:01 AM PDT
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  20. Spin Coolidge
    Spin Joined in the first year of Ricochet Ricochet Charter Member

    Western Chauvinist: but I wish Colorado had figured that out before legalization.

    The other day I made a comment on Facebook that we conservatives ought not compare each other to liberals. But now I am about to do so. Why, pray tell, do we need the government to figure out how to prevent all of the bad things from happening before we require them to legalize de-criminalize something? Should we figure out how to make sure there are no accidental deaths of children from handguns, before we let people own handguns? Should we figure out how to make sure every parent keeps their kid in a carseat before we let people buy a car?

    • #20
    • October 27, 2015, at 6:02 AM PDT
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  21. Fred Cole Member

    Look, you can rationalize it all you want, but when you include casual slurs, you’re really poisoning the discussion. It’s be like if I called everyone who consumes alcohol “drunks.” (Except not nearly as bad because alcohol hasn’t been subject to an 80-year government propaganda campaign.)

    You don’t have to respect pot users, but I’d appreciate if you respected the subject enough, and the people you’re discussing it with, not to slur them

    • #21
    • October 27, 2015, at 6:07 AM PDT
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  22. Fred Cole Member

    As far as edibles being some kind of scary “problem,” that they’re problematic at all is a function of prohibition. It’s been forbidden for so long that people’s ace to learn how to responsibly consume them.

    It’s kind of like how college freshmen overdose on alcohol. They’ve never been around it, they don’t know the proper dosage. But it time people learn and that knowledge becomes widespread.

    It shouldn’t be an excuse for nannies to come in and regulate.

    • #22
    • October 27, 2015, at 6:11 AM PDT
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  23. BrentB67 Inactive

    Jamal Rudert:This was very much my thinking, WC. Because what is marijuana? Dried leaves. It’s just not worth that much, being a low-value-added product. The street price reflects only the danger inherent in producing it under a prohibitionist regime. The weakest argument that the legalization side had was that simultaneouslyrevenue would pour in, and all the violent drug dealers would be put out of business. Well you can have one or the other. Any price level that would drive the cartels out will be too low to return much tax revenue to the state. They have somehow created the worst of both worlds.

    Where are the black market cigarette cartels?

    • #23
    • October 27, 2015, at 6:19 AM PDT
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  24. BrentB67 Inactive

    Fred Cole:As far as edibles being some kind of scary “problem,” that they’re problematic at all is a function of prohibition.It’s been forbidden for so long that people’s ace to learn how to responsibly consume them.

    It’s kind of like how college freshmen overdose on alcohol. They’ve never been around it, they don’t know the proper dosage. But it time people learn and that knowledge becomes widespread.

    It shouldn’t be an excuse for nannies to come in and regulate.

    When the lack of knowledge regarding proper use and dosage (good use of the word) result in people damaging their ability to be gainfully employed will the rest of us get the tab via the federal welfare state?

    • #24
    • October 27, 2015, at 6:22 AM PDT
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  25. iWe Reagan
    iWe Joined in the first year of Ricochet Ricochet Charter Member

    BrentB67:

    Jamal Rudert: Well you can have one or the other. Any price level that would drive the cartels out will be too low to return much tax revenue to the state. They have somehow created the worst of both worlds.

    Where are the black market cigarette cartels?

    Native American tribes.

    • #25
    • October 27, 2015, at 6:30 AM PDT
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  26. Fred Cole Member

    BrentB67:Where are the black market cigarette cartels?

    For real?

    Cigarettes are $15 a pack in New York City. That’s from taxes.

    Black market cigs are a huge business in NY. That’s what Eric Garner was selling when the police strangled him to death.

    • #26
    • October 27, 2015, at 6:34 AM PDT
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  27. Western Chauvinist Member
    Western Chauvinist Joined in the first year of Ricochet Ricochet Charter Member

    iWe:

    BrentB67:

    Jamal Rudert: Well you can have one or the other. Any price level that would drive the cartels out will be too low to return much tax revenue to the state. They have somehow created the worst of both worlds.

    Where are the black market cigarette cartels?

    Native American tribes.

    Yes! Mr. C said this will solve the “income inequality” problem on the reservations. The state is incentivizing one-stop shopping for all the vices: smokes, dope, and gambling.

    • #27
    • October 27, 2015, at 6:35 AM PDT
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  28. Fred Cole Member

    BrentB67:When the lack of knowledge regarding proper use and dosage (good use of the word) result in people damaging their ability to be gainfully employed will the rest of us get the tab via the federal welfare state?

    Okay, so we need to have extra regulation on edibles because … people might overdose and not be able to get a job and go on welfare?

    Look, of all the people-smoke-pot-and-go-on-welfare arguments I’ve heard, that one takes the cake.

    • #28
    • October 27, 2015, at 6:35 AM PDT
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  29. Western Chauvinist Member
    Western Chauvinist Joined in the first year of Ricochet Ricochet Charter Member

    Fred Cole: It’s kind of like how college freshmen overdose on alcohol. They’ve never been around it, they don’t know the proper dosage. But it time people learn and that knowledge becomes widespread. It shouldn’t be an excuse for nannies to come in and regulate.

    Yer such a romantic.

    Somehow o.d.’ing using a beer bong doesn’t seem like a problem of lack of exposure. More like a lack of common sense.

    • #29
    • October 27, 2015, at 6:38 AM PDT
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  30. Fred Cole Member

    Well at a fundamental level, it’s lack of familiarity that leads to the overdose. It’s not people in their 30s, sipping wine who need to get their stomachs pumped. It’s newbies who don’t know their limits.

    • #30
    • October 27, 2015, at 6:41 AM PDT
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