Legislators’ 30 percent tax on marijuan could boost illegal distribution

It’s spring, the time of year when legislators’ fancy turns to money.

Not that they don’t spend all of their time thinking about how we have their money and why they need it back. But, while many of us dream of tripping through meadows of wildflowers, others dream of a sunshiny day collecting taxes.

Outside of just trying to get our money the usual ways, the big push for revenue seems to be with the taxation and regulation of marijuana, subsequent to the passage of Amendment 64, which may or may not have legalized it, and people may or may not be arrested for it.

Since we’re so far incapable of deciding how much is too much to ingest, I suppose that leaves the market pretty wide open.

The Legislature can’t seem to decide how much is too much to operate a motor vehicle or, for that matter, I suppose, a shotgun, although I think using a 10-gauge in the duck blind while smoking marijuana may make surrounding hunters a bit edgy. It is also probably a fire hazard and annoying to the ducks.

So far, marijuana taxation and regulation have been a bonanza for center–left politicians in Denver, since it seems to combine several of their favorite things – marijuana, taxation and regulation.

House Bill 1317 came out of the Colorado House of Representatives this week and is headed to the Senate. It envisions sort of a sprout-to-bong approach to regulation and taxation.

The folks over at the Colorado Watchdog have done a nice job of analyzing the bill and highlighting the bloated regulatory structure created in its 86 pages that makes one wonder if even the drug trade will be lucrative enough to support the inevitable bloat and waste in the program.

After all, the criminal competition traditionally has taken a more aggressive approach to poor performance than the state personnel board. It’s hard to compete with industry leaders who reward success with lucrative untaxed compensation and failure by giving an employee the opportunity to literally become part of a construction project.

In all seriousness, no matter how one feels about the marijuana initiative itself, if implemented, it should at least attempt to reduce the penetration of organized crime into the community. One of the big selling points for recreational marijuana was that it would take organized crime out of the equation or at least drastically curtail it.

However, a 30 percent tax on marijuana is going to, by itself, create an inequitable market between legally obtained products and illegal ones. Regulatory compliance costs will increase that even more.

Greed on the part of legislators to take in tax dollars will succeed in only lessened revenue and continuing involvement of organized crime in the distribution of the drug.

There are two reasons for this. First, the state has removed the illegality of possession of the substance, which means transportation and possession is no longer such an issue.

You can be seen with it, and you can have it in your car, your pocket and so forth without fear of arrest.

This leads to the second point: The substance is fungible. One bit looks like the next, and there is no way to tell between legally obtained marijuana versus illegally obtained marijuana. Once the substance has left the provider, one bunch is now seemingly as legal as the next to the wandering eye.

This is nothing but help to illegal drug-trade competition. Therefore, as much as avaricious legislators might want to believe no economic forces are at play in their taxation of something some consumers wish mightily to own, they are mistaken.

Unless the members of the Legislature get smart about taxation on this or any desired good, they are simply ensuring that a black market will continue to exist and maintain its criminal behavior. Then, we will have a result often found in government, a continuing problem and loss of money.

Rick Wagner writes more on politics at his blog, The War on Wrong.


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Geez, I must be really dumb, I couldn’t follow Rick’s “logic” on this issue? Does he want it taxed or not? Does he want it regulated or not? Taxation creates a black market?

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