Prop 19, Is Just Another Way For Politicians To Collect More Taxes

ChicoER ^ | 10/15/10 | Chuck Wolk

[OneVike]

Next month on election day, Californians will have the chance to legalize marijuana for the specific purpose of raising revenues via taxes. Think about that for a moment: legalizing a dangerous product for the specific purpose of collecting more taxes. I guarantee you that the politicians will begin demonizing marijuana the moment the Secretary of State reports the initiative passed. By Christmas they will be telling the public how much revenue they will collect from taxing marijuana, and by next June they will be raising taxes on it to pay for the treatment of those who want to quit but cannot do so on their own. Then in the run-up to the 2012 election, the politicians, the MSM, Hollywood, and the music industry will claim we need to support an initiative to raise taxes on marijuana so that schools will have the funds needed to keep up with the states that spend 1/10 of what California spends per student. Let's be honest, we all knew that it would be just a matter of time before the same individuals who pushed to legalize medical marijuana would get enough signatures to put up a ballot initiative to legalize it without qualifiers. It is, however, a bit ironic when you consider that these same individuals have gone on a witch hunt against tobacco products.

The attack began over 50 years ago when the Surgeon General forced the tobacco companies to label their products with a warning to the user about the health risks of smoking. Fifty years later there are now some communities in California that have gotten so militant in their anti-smoking campaigns that they are even considering passing ordinances that would ban smoking in private homes. That begs the question, "If smoking tobacco is so harmful to society that we need to ban it from being smoked even in the privacy of one's home, then why legalize a drug that scientific studies have proven is upwards of five times more harmful to the body than tobacco?"

A 2007 study by the Medical Research Institute of New Zealand found that smoking one marijuana joint is equal to smoking five cigarettes at the same time. And there are numerous other medical reasons that should keep such a drug from being legalized. Besides having over 400 chemicals that have been identified in the plant, over 2,000 more chemicals are generated when cannabis is set on fire and smoked. That's 2,000 toxic chemicals invading the blood stream though.....

(Excerpt) Read more at ChicoER

[fr_freak]

I don’t think this bill will reduce the price of marijuana. I do not smoke it, but have it on pretty good authority that the price of Marijuana has remained steady since the passage of the Medical Marijuana bill.

Well, I have it on pretty good authority that the price of marijuana in the "co-ops" has actually been higher than one could get on the black market. Why? Presumably because the co-op supply has the added benefit of being legal, which makes it a more attractive option for those with prescriptions. Furthermore, where only one co-op exists in a town, they have a monopoly, and thus can charge what they want. I also have it on good authority that when a second co-op in a town not far from here was allowed to open, the price of the MJ dropped $100/oz in the first co-op due to the competition. Got to love the free market, eh?

The idea that this proposition will raise tax revenue significantly for the state is, of course, asinine. With the existing black market and the ease with which one can grow pot at home, there will be no incentive to report crops for tax purposes, unless one is a large scale grower. Of course, very few will be stupid enough to be large scale growers while pot remains illegal on a federal level, except those black marketers who are already doing so. There will also be very little incentive for buyers to go to a pot store (which, again, will tend to few and far between as pot is still illegal federally - occasionally co-ops get raided by the feds now) because the taxes would raise the price as opposed to that which one could buy from his neighbor at half the price.

Now, having said that, it is also ridiculous to claim that legalizing pot will increase drug cartel market share and associated crime. That is exactly the opposite of what will most likely happen. In the real world, the sudden, common availability of the product will dry up the cartel market better than any DEA operation could ever do. Pot is not like cocaine or heroin, where it requires a lot of processing. Quite literally, you plant it, keep it alive, harvest it and smoke it. Period. Anyone can do it. In their closets even. Keeping it illegal is what gives the cartels their market share. If we use the currently existing co-ops as an example, the pot available there is grown solely by local people who also possess prescriptions or licenses to grow. That is the only way for it to be legal (statewide). The idea that the co-ops now sell cartel pot is asinine also. The co-ops are the cartels competition.

There may be legitimate reasons for concern about full legalization, but most of what I see posted here on FR is nonsense.

[Lurker]

legalizing a dangerous product for the specific purpose of collecting more taxes.

You mean like alcohol and tobacco?

[OneVike]

Yes, but it wasn’t legalized per say for taxes so much as it was in response to the voters who demanded it overwhelmingly. There is no such outcry from the public to legalize it like there was for alcohol.

You also make the mistake of forgetting the culture of our society that has always had a nose turned our towards drugs, but not alcohol.

Societies that have always had drugs legal, have always been third world cultures, and that is where we are headed in America with the trend towards legalizing everything that has been considered immoral in our culture.

Remember, alcohol has never been immoral in our society, the behavior of those who get drunk has, but not the source of their behavior. Strange reality, but it is a fact.

[Wolfie]

All drugs were legal in the U.S. until the early 1900’s.

[Lurker]

Yes, but it wasn’t legalized per say for taxes so much as it was in response to the voters who demanded it overwhelmingly.

That would be 'per se'. And if all of the hysterical anti-weed articles are any indication it seems that a good number of voters are demanding that this Prohibition be repealed in CA.

There is no such outcry from the public to legalize it like there was for alcohol.

Right. This Proposition wandered onto the California ballot all on its own.

Societies that have always had drugs legal, have always been third world cultures,

Drugs were legal in the US until about 1915 or so. Were we a third world culture in 1915?

Remember, alcohol has never been immoral in our society,

You're not much for the history of your Country, are you. I suggest you crack a book or two before you spout off silliness like this. It makes you look stupid.

L

[monkeyshine]

I agree, legalization would probably not increase drug cartel share. Legalizing pot will not likely increase pot consumption. I live in Los Angeles where pot clinics are nearly ubiquitous (the city has been fighting in the courts to limit the number of establishments but so far every win has been stayed by the courts). It doesn’t matter which one you go to, the list prices are virtually the same.

What legalization will do is push the cartel supply into the mainstream. At first, that may actually cause a shortage as new retailers come online leaving less MJ available per retail establishment. It could make an intersting economic study maybe you and I should work on :-)

If the price of an ounce dropped $100 due to the introduction of competition, I would argue that this was likely a result of reduced retail profit margins than any reduction in wholesale price. The monopolist as you note charges higher prices. Yet even from a macro view, without an increase in supply the price is not likely to drop much. Yes, retailers could sell for little to no profit. If your business is built on selling MJ in a clinic or co-op (and for what it is worth, most of L.A.’s retailers are not growing but buying and reselling) you need profit. If you are a 7-11 franchise you make all your profit on other goods, adding MJ to your product mix can be done at almost no margin as selling pot will likely increase sales of hot dogs and slurpees and cheeto’s.

So I do agree that retail price may drop after passage of Prop 19 due to lowered retail margins but this is probably not going to cause a reduction in wholesale prices. Prop 19 would threaten the existence of all the co-ops, though as an aside I wonder whether a state court challenge against the tax for medical purposes would succeed. In other words, could the co-ops selling only to “prescribed users” continue to sell tax-free “medical pot”, whereas other stores would have to charge tax for “recreational pot”.

If in the end pricing pressure hits the wholesale level, there is an increased possibility of violence between and among cartels. We agree that it is not likely that a large-scale licensed grow operation will go online. That leaves the supply to the cartels and to the now permitted home-growers who will likely discreetly sell or consume their own harvest. Will this home-grown supply put a dent into the demand such that the cartels will feel the price pressure? I don’t believe it will, but I agree it is possible in time. And the more it does, the more pressure the cartels will be to monopolize the mainline distribution.

And taking it to a not-so-extreme level, it is possible that we will start seeing more consistent strains of MJ and even more formal types of “brands” as marketers try to profit from the new law. If so, it is likely that ‘brand name’ pot will come with a price premium. We can’t discount the power of branding and/or name recognition, and among consumers of MJ there is likely to be a desire for consistency.

[TigersEye]

There may be legitimate reasons for concern about full legalization, but most of what I see posted here on FR is nonsense.

Indeed it is.

[TigersEye]

There is no such outcry from the public to legalize it like there was for alcohol.

Then how did it get to be a ballot measure with a good chance of passing in one of the most populous states in the country?

[TruthConquers]

Those are some areas this will affect.

But there is one I came across that is frankly scary.

Phoenix is the kidnapping capital of the US. And Mexico has a huge problem with this. So, how does Prop 19 play into this?

How about that the drug cartels won’t care if the pot profits disappear, they will just move up to kidnappings instead. They may do this in time, anyway. But Prop 19 just might make that come on the scene that much earlier.

YIKES!!!

[Attention Surplus Disorder]

As far as I’m concerned, the cartels and the violence they promulgate will have to be met with absolutely ultraviolent, no rules of engagement vigilante squads equipped with mini-guns and close air support. I’m totally serious. That is, if there’s the actual mandate to combat them, which I doubt.

It may well be that we will have to construct a barrier on the border much like Israel has done, complete with concrete barrier and exclusion zones.

[TigersEye]

Human trafficking, heroin, cocaine and weapons are already on the scene and have been for some time. Those things are a much bigger part of the Mexican cartels than pot ever has been. My suspicion is that a wholesale slaughter of Mexican cartel members is going to happen in the not too distant future.

[bboop]

Yah, it’s just a Tax Grab for the spend-a-holics. Now that Amsterdam is voting to change their policy — having noticed it attracts great gobs of low-lifes — California sees fit to implement it? Say it’s not so.

[bboop]

Yah, it’s just a Tax Grab for the spend-a-holics. Now that Amsterdam is voting to change their policy — having noticed it attracts great gobs of low-lifes — California sees fit to implement it? Say it’s not so.

[fr_freak]

What legalization will do is push the cartel supply into the mainstream.

I'm not sure why you would think that. Perhaps if pot were legalized and everyone and their brother began selling it in the mom and pop stores, there might be enough of a supply shortage to tempt some people into buying cartel pot, but for the most part, I think that people would grow their own, or buy from other people they know who grow their own. For example, I have friends in the notorious Humboldt County, and there is, almost literally, a garden in every closet up there. If pot were fully legalized, I can only imagine these people would grow more, not less, and those who didn't want to go through the hassle of growing would buy it from their buddies who do. That is the key: the ease with which pot is produced. I can't imagine why anyone would bother getting pot from a criminal organization when they can get it at home or from their next door neighbor. The cartels would be forced to shift their California business to other drugs like meth or coke, or sell to other locations where pot is still illegal.

Of course, the ease with which pot is produced also means that the state's dreams of reaping huge tax benefits from pot sales are probably just, eh, pipe dreams. The underground economy established over years of prohibition will allow sales under the table to go full throttle.

[monkeyshine]

I think legalization will push the cartel supply into the mainstream for 2 basic reasons: 1) People who wanted to grow pot for consumption or sale or to save money are probably already doing so and 2) Prop 19 will only allow personal grow areas up to 25 sq ft (5 ft x 5ft for example) and considering the need for both male and female plants to cross pollinate each new growth area will be barely enough to supply the house that grows it and maybe a few friends.

You seem to base your projection on the idea that a lot of new home grown supply will come online. Now that you know the law limits the amount of growth - and the amount to possess and to sell to no more than 1 ounce - do you think differently? Or do you think a lot of new growers will come aboard, even if small time? Frankly I don’t think the home growers will dent the demand. People can make beer and wine at home, it doesn’t really dent the demand much. Given the restrictions and need for licensing I do not see new home growers suddenly trying to supply retail establishments. Yes, home growers will supply friends but I suppose this all depends on how many new home growers come on line. I just do not envision a lot of new growth.

Prop 19 also seems to allow municipalities the right to decide who can and cannot sell it at retail. This might result in a reduction in the current number of clinics and/or retail establishments and push the retailers underground. At the same time and somewhat ironically, Prop 19 allows any wholesaler with a license the right to transport their crop to any other city or county without regard to the local ordinances governing the sale! Your friends in Humboldt could get a local permit and wholesale by the ton to re-distributors in San Diego without any repercussion.

So what I see happening is perhaps a few more people supplying themselves and close friends, and then a lot more of the current suppliers going mainstream. It seems to me most of the people retailing MJ are buying from middlemen who in turn are buying from large cartels - I cannot otherwise explain the massive amounts of similar strains showing up in various co-op/clinics. But with permits to transport and sell large quantities of MJ, the middlemen will seek out the paths of least resistence and unless there is a major crackdown on large producers (which I doubt will occur) it is in their best interest to buy by the kilo (or tonnage) for redistribution to retailers and sub-wholesalers.

I otherwise agree with you, the dream of big tax revenue is a joke. I just don’t see many people outside the current network of suppliers/retailers even trying to get permits to grow or sell it. Their current business model is to sell it underground or in tax-free co-ops. It does appear that Prop 19 contradicts the Medical MJ law which allowed the co-ops to form and sell pot tax free, and I also wonder what the implications are for both licensing of co-ops, reducing the number of co-ops, as well as the ramifications of slapping a tax on “medicine” that had previously been sold tax-free. If the tax is too high, we both know pot sales will go back to the underground. The tax idea is just plain pipe-dreaming pun intended.

[fr_freak]

I guess the main crux of my thinking is that there is a LOT of home growing going on now, and with legalization, it will only increase. Every bit that it increases, decreases the cartel market share. Even if people don't bother getting the proper licenses, which they probably won't, if the penalties for growing or possession are minimal enough, people will go for it even if it is still technically illegal.

Also, from the little 4x2 closet gardens I've seen, and the amount of output they can generate, I'd say that a 5x5 plot could put out some serious stuff. I'm not an expert on the growing specs, but 25 sq ft year round will produce plenty o'pot, and if we assume that all of the existing home growers will continue, and the number of growers may double, that's a big dent in the market. This is all speculation of course, as I couldn't say exactly what will happen. However, the reason I expect a drastic increase in home growership is for a couple of reasons: 1) growing pot is easier than home-brewing beer, 2) once possession and growing are legal, even if only under controlled licensing, enforcement of any restrictions on pot at all will diminish. That's what I've seen up in Humboldt - plenty of home growers don't have prescriptions, but enough do to make it not worth law enforcement's while to investigate when they see it, except maybe when its blatant.

Anyway, I suppose we won't know anything for sure until we try. I still think this will pass because, after all, this is California, but I could be wrong.

[HiTech RedNeck]

If something has to be taxed, why not tax stupidity.