Taxing Cannabis

[iamnotacop]

http://cannabisnews.com/news/24/thread24946.shtml

 

CA -- California voters may soon get a chance to weigh in on whether marijuana should be legalized and taxed by the state. If enacted, this may help the state's budget by providing revenue from a brand new source, while also freeing up money that previously went to enforcement efforts against marijuana growing. Of course, marijuana would still be illegal under federal law, but this may be a turning point in the legalization movement -- the point where politicians desperate for tax revenues see dollar signs instead of prison bars when looking at the cannabis plant.

 

And make no mistake -- this is not medical marijuana we are talking about. From the wire service report:

 

A proposed ballot measure filed with the California attorney general's office would allow adults 21 and over to possess up to an ounce of pot. Homeowners could grow marijuana for personal use on garden plots up to 25 square feet.

 

Now, 25 square feet sounds like a lot, but it's really only a plot five feet by five feet. Assumably, this was written into the ballot measure so marijuana (at least initially) wouldn't be sown by agribusinesses in 1,000-acre fields. But even with the land-use restriction, the initiative is remarkable for the lack of other restrictions. No mention is made of "medical" or "medicine" or any of that -- just "adults."

 

There are even two ballot measures to choose from. The second one is even less restrictive:

 

The Tax, Regulate and Control Cannabis Act of 2010 would set no specific limits on the amount of pot adults could possess or grow for personal use. The measure would repeal all local and state marijuana laws and clear the criminal record of anyone convicted of a pot-related offense.

 

Bet that would save a few dollars on prisons. And even if these ballot measures fail, state legislators are introducing bills to do exactly the same thing. So, while it should not in any way be seen as inevitable, it now appears possible that California may soon legalize and tax marijuana, used for recreational purposes.

 

While the concept of taxing marijuana is a new one for most people to consider, it actually has a long history. The very first federal law dealing with (pun intended) marijuana was the Marihuana Tax Act of 1937. Earlier laws outlawing "narcotics" had left out marijuana (or, in the spelling more common at the time, "marihuana"), so this was a more specific law dealing only with cannabis (and hemp). It ostensibly levied a tax on marijuana, which was widely used in medical products of the day. The tax was pretty low (the base rate for a doctor was one dollar for a tax stamp, per year), but the penalties for not paying the tax were the real purpose of the law. The law did not make marijuana illegal, so what the feds would clap you in prison for was not ponying up the tax. This had to be softened during World War II, when hemp was necessary for military supplies (hemp ropes, before nylon became widespread) and the planting of hemp was actually encouraged by the federal government (as in the "Hemp for Victory" movie put out by the feds in 1942).

 

Later, in the 1950s, marijuana was flat-out made illegal at the federal level. And then, at the beginning of the 1970s, the Controlled Substances Act codified all illegal drugs, and superceded the 1937 Marihuana Tax Act.

 

But taxing illegal drugs, including marijuana, didn't end there. The next iteration of taxing marijuana came as a result of individual states being annoyed at the federal government. I believe the first of these was Arizona, which (in the late 1970s and early 1980s) had to watch as the feds made a lot of money off the drug traffickers moving through their (border) state. In the 1980s, the big weapon used in the Drug War was property confiscation. So the federal Drug Enforcement Agency (DEA) would catch a semi truck full of bales of weed on an Arizona highway, and they would impound the truck. Later, they'd sell the truck in a government auction, and the DEA got to keep the money. Arizona was annoyed at being cut out of the profits, so they instituted a state tax on marijuana and other illegal drugs. This way, when the semi was auctioned, they could claim "unpaid taxes" on the cargo, and get their cut of the money raised. Many other states followed suit, and passed their own drug taxes for the same purpose -- forcing the feds to share the spoils. They all sold (and some still sell) drug tax stamps for this purpose (Nebraska's stamp unquestionably has the most creative design).

 

So, once again, the purpose of the tax was disingenuous. The states had no interest in making drugs legal, they just wanted a cut from any busts the feds made in their state. But now, for the first time, California seems to be seriously considering both legalization and taxation simultaneously -- in other words, they are interested in the tax revenues themselves, rather than a back-door method of gaining windfall taxes from federal busts.

 

But I would caution the state lawmakers -- and the people advocating for the new laws -- to be conservative in estimating the revenue gained from these taxes. This is a by-product of the 100-year history of the Drug War itself. When you read in a newspaper that "$6 million worth of drugs captured" this dollar amount is often vastly overstated. And, even taking such estimates seriously, there's a factor that most people don't even take into consideration, which shouldn't be ignored.

 

Say you want to estimate how much money California would make off a new marijuana tax. You come up with an estimate of how much pot is sold in the state (let's call it $100 million, just for argument's sake -- since I have no idea what the actual figure is). You then estimate how much the market will grow, due to it now being legal. But then you've got to subtract anyone who grows their own at home, since they won't be selling it to anyone (the tax is usually levied on point of sale, but I guess if it was a production tax they'd theoretically tax peoples' back gardens as well). Finally, you come up with a figure.

 

But the big factor most people will miss is that the price of something which was previously illegal will go down if it is made legal. The price of moonshine during Prohibition was about ten times what hard alcohol sold for afterwards. Meaning, overnight, that "$100 million" market becomes "$10 million." When something is illegal, most of the price is for the risk involved in producing it and getting it to the customer. Remove the risk, the price always drops. Always. Especially if a law passes without a "25 square foot" restriction, because then farmers out in California's Central Valley will start growing massive amounts of marijuana (and as every economist knows, when the supply goes up, the price goes down).

 

So California should be careful when estimating what effect a (legal) marijuana tax would have on the state's coffers. An easy way to avoid some of this problem would be to design the tax on "weight" rather than as a sales tax (percent of purchase price, in other words). Then the projections for anticipated revenue might be a little easier to make, because the price per ounce to the customer wouldn't really matter, as the state would be guaranteed a certain dollar amount no matter how low it went.

 

A recent poll showed that 56% of California voters already approve of the concept of legalizing and taxing marijuana for personal, recreational use. Meaning that a ballot initiative has a fairly good chance of passing. I would just caution everyone to be realistic when making estimates as to how much tax revenue would be raised by doing so. California has such massive budget problems right now that a marijuana tax certainly couldn't hurt the state's cash flow. And, with the voters apparently ready to approve such a scheme, it looks entirely possible that it could happen. But overestimating the revenues expected could actually undermine the case for doing so. The advocates for legalization and taxation should be careful when drawing up their estimates, and keep their promises of tax revenue realistic, to better convince voters of the practicality of the idea.

 

Source: Huffington Post (NY)

Author: Chris Weigant

Published: July 29, 2009

Copyright: 2009 HuffingtonPost.com, LLC

Contact: scoop@huffingtonpost.com

URL: http://drugsense.org/url/J6rJzU9c

Website: http://www.huffingtonpost.com/

[Priceadon2]

Nice post imnotacop.

[MadamePandora]

My one question is ... how can they be at that point already and we are nowhere.

 

What are the fundamental reasons for the US being at this point and us still hiding in bunkers having a choof and praying not to be caught?

[iamnotacop]

Because the State of California has huge economic problems, and there are people over there with common sense trying to find ways to make money, and/or save money (judicial system and incarceration rates etc.

 

Even if this was to happen, then Federal Law still overrules State law, so it will still be illegal until the President changes the laws at a Federal level.

[Gee]

I honestly can't see Australia changing anything until the US does. We are their bitches.

[Crunchy]

if obama ever does allow the legalization of marijuana on a federal level then it'll only be once he's re-elected or sees no hope of ever being re-elected. he wouldnt risk his chance for four more years by legalizing marijuana now or even softening up to the issue with voters, not until hes got his re-election in the bag.

[itsMoeyy]

Btw

 

A poll in april 2009 said that 56% of people would vote yes

and a poll in october 2009 said that 44% of people would vote yes

 

so i'm unsure if the ballot will pass

 

As for legalization at federal level in america is not that far away.

once cali legalizes marijuana, they WILL gain alot of money from tax and less criminals etc. and that the other stats will soon see this and then they will also try to legalize it.

 

once HALF of the states in america has legalized cannabis laws then the federal law can be changed to make marijuana legal all throughout usa.

 

and once that happens, hopefully the trend will follow over to here in aus.

[Budman2012]

No Worries,

Just incase anyone Didn't know ... It passed with well over 150,000+ signatures more than they needed ... and they vote in Novemeber

I lost my links but this will do ... :

http://articles.latimes.com/2010/mar/25/lo...ive25-2010mar25

Measure to legalize marijuana will be on California's November ballot

 

Supporters of the initiative collected well more than the 433,971 signatures needed for it to go before voters in the fall, again putting the state at the forefront of the nation's drug debate.

March 25, 2010|By John Hoeffel

 

An initiative to legalize marijuana and allow it to be sold and taxed will appear on the November ballot, state election officials announced Wednesday, triggering what will probably be a much-watched campaign that once again puts California on the forefront of the nation's debate over whether to soften drug laws.The number of valid signatures reported by Los Angeles County, submitted minutes before Wednesday's 5 p.m. deadline, put the measure well beyond the 433,971 it needed to be certified. Supporters turned in 694,248 signatures, collecting them in every county except Alpine. County election officials estimated that 523,531 were valid.

 

The measure's main advocate, Richard Lee, an Oakland marijuana entrepreneur, savored the chance to press his case with voters that the state's decades-old ban on marijuana is a failed policy.

 

"We're one step closer to ending cannabis prohibition and the unjust laws that lock people up for cannabis while alcohol is not only sold openly but advertised on television to kids every day," he said.

 

Lee, tapping $1.3 million from his businesses, has put together a highly organized campaign that he emphasized Wednesday would be led by a team of experienced political consultants, including Chris Lehane, a veteran operative who has worked in the White House and on presidential campaigns.

 

"There's all kinds of big professional politicos who are coming on board now to take it to the next level," Lee said.

 

Opponents have also started to put together their campaign. "There's going to be a very broad coalition opposing this that will include law enforcement," said John Lovell, a Sacramento lobbyist who represents the California Police Chiefs Assn. and other law enforcement groups. "We'll educate people as to what this measure really entails."

 

The measure, like the medical marijuana initiative, could put California on a collision course with the federal government. The possession and sale of marijuana remain a federal crime.

 

This month, President Obama's drug czar, R. Gil Kerlikowske, decried legalization in a speech to police chiefs in San Jose.

 

The initiative would allow adults 21 or older to possess up to an ounce for personal use.

 

Possession of an ounce or less has been a misdemeanor with a $100 fine since 1975, when Atty. Gen. Jerry Brown, who was then governor, signed a law that reduced tough marijuana penalties that had allowed judges to impose 10-year sentences.

 

No worries ... and I really like them 'Students for Sensible Drug Policy' ... man do they do a good job

Here's a little article by them on 'Alternet' (great site ) ... somewhat highlighting the efforts they were putting in to get this done (a month ago) :

http://www.alternet.org/drugs/146115/the_f...eform_is_bright

and what happens now ...

http://www.eastbayexpress.com/ebx/who-will...ent?oid=1689691

Just a quick random search for California and Cannabis Legalization will yield all and more than you would ever want to know ofc

But there ya go

Cheerz

 

Budman

[bloodshot_eyes]

My one question is ... how can they be at that point already and we are nowhere.

 

What are the fundamental reasons for the US being at this point and us still hiding in bunkers having a choof and praying not to be caught?

 

I have been wondering this for a while. What the hell happened in this country. In the 70's, Don Dunstan, then premier of South Australia, very nearly legalized, not decriminalized cannabis in SA. It obviously never happened but it was talked about and even that is unthinkable in this county in the current climate surrounding cannabis here. If this did happen BTW, SA would have been the only place in the western world to completely legalize. Adelaide would have been more of a haven than Amsterdam. Then in the 80's, decriminalization came to SA. The laws were really very lax, 10 plants per adult for only a $150 on the spot fine.

 

Fast forward to 2001 and suddenly something changes. The shit hits the fan and we get a full blown reefer madness campaign, laws start falling around the nation. You cant even buy a bong in most places now!! What changed?? What spurred all this on?? Now Australia seems to lead the world in Reefer madness like weed demonising studies into all things wrong with this substance. If you see a study saying that something about pot is bad for you, there is a good bet its from Australia, if not, the UK. I really dont understand where all this is coming from when in the 70's and 80's, whilst we were all getting chilled with "flowers in our hair", the US was going all Nazi fascist on the weed. Its like its done a complete about face and now we are out of step with the rest of the western world. I honestly hope this isn't the case but it seems to me that we are slowly falling in line with SE Asia with our views and policies on recreational drugs. I am perplexed.

 

End Rant!!

[cybergenesis]

Its one of those issues like Euthanasia, it should be allowed, but the Christians and moral panic police will never allow it.

 

They might increase penalties for cannabis further, before it gets better.

 

Imagine how bad the chances of legalization are if Tony Abott gets in power