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Marijuana taxes

Jacob Sullum thinks proposed marijuana taxes will be too high. Mark Kleiman thinks they’ll be too low.

I’ll let you read the two competing pieces and see where you think reality will land. I haven’t studied the tax proposals enough to have a prediction. I will say that I’m not personally opposed to a cannabis tax, in large part because it’ll make it harder to reverse legalization once governments get a taste. But it’s important that taxes be low enough to encourage people to quickly switch to legal channels.

In trying to decide between the two, you can’t really be faulted for questioning the reliability of Kleiman’s arguments, given the petty and petulant way Mark deals with people who have a different opinion.

Once again, Mark trots out the tired and offensive “you must be smoking” ad hominem:

“Anyone who’s worried about the price of cannabis is spending far too much time stoned.”

[Update: Mark explains his use of this argument in comments. Though not obvious, I can see how it could be read that way.]

It’s a ridiculous argument device that he uses to a bizarre extent.

Later on, he tries to “refute” Sullum in advance by attacking libertarianism in general.

Naturally, true-believing libertarians insist that cannabis legalization be done in the way likely to generate bad outcomes. Taxes BAD! Regulations BAD! “Commercial speech” is SACRED! The free market FOREVER! And of course drug abuse is a merely imaginary problem, so cannabis is just an ordinary commodity that the market will handle perfectly.

Again, a common Kleiman technique – refer to differences of opinion regarding how policy will work as opponents’ desiring a bad outcome. I’ve never heard a libertarian say that drug abuse is an imaginary problem – they just disagree with Kleiman regarding the best way to deal with it.

The slogan at the “Reality-Based Community” is “Everyone is entitled to his own opinion, but not his own facts.” What they don’t say is that Kleiman treats his opinions as if they were facts.

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41 comments to Marijuana taxes

  • Tony Aroma

    I predict that if legal prices are too exorbitant, they will be paid mostly by tourists who want weed and don’t know where else to get it. Locals will continue as they have been, growing their own or buying from the black market. There has to be some kind of incentive to get people to switch to the legal, regulated market, and ultra-high taxes is NOT it.

    • Matthew Meyer

      But legitimacy is attractive to many folks, and worth paying more for.

      As is having a wide selection of (hopefully) high-quality products to choose from.

      • Tony Aroma

        True, but only up to a point. I think some of the crazy-high tax numbers that I’ve seen being tossed around are past that point.

  • swansong

    History shows…and continues to show…(in Canada, anyway)…that tax revenue is a far more addictive element than cannabis could ever be.

    As it stands now taxes on tobacco have become so high that smuggling has become a profitable enterprise.

    Governments seem unable to grasp the concept of diminishing returns where sin taxes are concerned.

    I won’t be tossing my seeds just yet.

    • primus

      Most tobacco smuggling is due to differences in taxation between jurisdictions. It is reasonable to assume the same will happen when cannabis is relegalized; if one place taxes it higher then people will simply obtain it from where the taxes are lower, at least partially, thereby reducing tax revenue in the high tax area and subsidising the low tax area. It’s already happening with liquor, cigarettes and prescription meds, why not pot?

      • Matthew Meyer

        But aren’t most of those black market smokes the very same brands that are sold legally? That will be one difference: you will have different sets of producers, one of which can be held accountable to regulations and one that can’t.

  • kaptinemo

    Every delaying tactic the prohibs can use to hinder the inevitable will be made. The problem is, the audience they are playing for is dying off, and their expected replacements faked drinking the prohib kool-aid as kids, and they have long memories as to how they were lied to.

    And I don’t need a professor in social policy to teach me what the school of hard knocks does regarding basic economics…although, evidently, the Washington State government did, because they hired one.

    If I didn’t have any scruples against taking advantage of the mentally incompetent, I wonder if I could sell them on a product called ‘hard vacuum’. After all, if they can pay out such big bucks for something else that was also basically nothing, then they shouldn’t complain.

    • Tim

      I was reading about post-repeal life in Ontario recently, and it sounds a lot like what is being proposed in some of these regulations. You had to have a licence, were limited as to possession amounts, and there was even ‘Liquor Court’ where offenders they considered bootleggers (over their numbers).

      • kaptinemo

        The prohibs are victims of their own ‘success’…as they defined it. Which makes what they are trying to do doubly ironic.

        As anyone who has studied propaganda in various societies can attest, when the propagandists begin to believe their own lies, they begin to spiral ever outwards into fantasies of efficacy…even when the reality of their irrelevancy becomes brutally apparent. Think Hitler in his bunker for an example.

        In this case, the prohibs think themselves still having significant effect upon public opinion when the exact opposite is happening, and that is becoming more apparent with every poll taken. The kids they tried to bamboozle 20 years ago in turn BSed the BSers, telling the prohibs they were having the intended effect (just to get the clueless old goofs off their backs and leave them alone) when the truth was painfully obvious to the contrary, and so the prohibs, lacking any real factual feedback, thought they were doing great when they were doing abysmally.

        Thus, the prohibs still think they can retard or halt the progress of re-legalization, and try to do so with (quite frankly) stupidly crafted regulations for legal cannabis which would suit the prohib agenda…but which stand an icicle’s chance in the blowtorch flame of economic reality.

        So, yes, things will get downright cloud-cuckooland with regards to these unworkable strictures…until enough people tire of them and begin to ignore them. The unworkable Rube Goldberg regulatory machines will break down of their own self-paralyzing complexity (or greed), a simpler (and more realistic) regulatory and taxation schema will arise, and things will then settle down to the same degree of normality experienced by an adult consumer of tobacco or alcohol when purchasing either..which will happen despite all the convoluted machinations of those prohibs trying to strangle the re-legalization baby in its’ crib with bureaucratic red tape.

  • jim

    it was irresponsible to hire a nutbar whos biased against pot as a consultant .it was done on purpose by those who shared his bias

  • BigJohn

    It was a huge mistake for Washington to hire Mark Kleiman as their legalization expert consultant. As Jim said, he is a nutbar. He’s a pompous arrogant fool and history will show that he was wrong on darned near everything. I just hope that he hasn’t screwed things up so badly that Washington’s legalization scheme flops and it makes other states not want to legalize. Thankfully Colorado doesn’t seem to listen to him much and hopefully other states and countries that legalize in the near term won’t pay him much mind and have their policies tainted as well. Makes the hair on the back of my neck stand up to see him cited as an expert so much because that incompetent fool doesn’t know what he’s talking about and he shouldn’t be put in charge of setting up a lemonade stand let alone a system for taxing and regulating marijuana.

  • Freeman

    Petulant? Yep, that’s Mark Always Right Kleiman.

    He and a large chunk of his audience absolutely abhor libertarians (along with just about any other group they don’t identify with), so he trots them out any time he wants to smear an idea or those advocating it.

    Commenter Mike has been doing a fantastic job countering Kleiman and his even more obtuse cohort Harrumphreys lately.

    Footnote: Harrumphreys has recently joined an ACLU panel to advise upcoming re-legalization efforts in California. Stay tuned, should be “interesting”.

  • darkcycle

    Kleiman. Feh.
    He thinks it’s like tea, or any other agricultural commodity crop. It’s not.
    I have also talked to some of the people who are coming in to the business….there are some rude awakenings about to happen.

  • I think a fair question is how will the government of the US and the local governments (in the form of prosecutions and enforcement) recoup the loss of income from prosecuting marijuana cases and confiscating all that money and property if marijuana is made legal? All those Federal funds filtered down for the drug war gone? I think the law enforcement system has become so dependent on drug war funds I am not sure they would know what to do to run their departments without it. We have geared our criminal justice system engine to run on the gasoline of the drug war.

    Without a drug war you wouldn’t need half the police on the streets you have now. Costs to providing actual help to addicts that request it would probably be a fraction of today’s drug war costs. The net loss will not be recouped in taxes. Nor will marijuana legalization become an expensive social issue like alcohol. The loss will ultimately be suffered in a shrinking need for law enforcement and other employees of the criminal justice system currently supported by government drug war funds. Its no wonder the main opposition to marijuana legalization laws has become local prosecutors and police and their lobbying organizations. Mark Kleiman still is what he always has been – a closet prohibitionist. Big taxes aren’t needed. Government could not tax enough to recoup the losses they will ultimately suffer in their criminal justice meat grinder. My opinion is law enforcement needs shrinking. It will if we end this damn war on drugs. Kleiman and his sin taxes and his expensive overpaid advice all need to go to the dust bin.

    • claygooding

      Law enforcement on the black market and the CIA running the show makes no explanation necessary of how serious the government is on maintaining the war on drugs.
      I would nearly bet that those warehouses full of marijuana shown on NGC confiscated by border patrol and customs are shipped and sold all over the US,,of course they report they are destroyed and have a piece of paper that reports it was.

  • Francis

    “Anyone who’s worried about the price of cannabis is spending far too much time stoned.”

    Says the guy in the middle of a blog post dedicated to his worries about the price of cannabis. Oh, I know. That’s not really fair, is it? Because we all understand that Mark was talking about people who are worried about what price they’re going to pay for cannabis. Kleiman, on the other hand, is worried about what price everyone else is going to pay. Yeah, here’s the thing. That’s not better. It’s worse. I’ll take a “pothead” neighbor over an insufferable busybody like Mark any day of the week.

  • primus

    There are so many different scenarios floating around describing how decrim or re-legalisation will look. It will surely evolve into something totally different than what is projected. That said, it is difficult to understand how it will be possible to stop home growing when they are totally unable to now. Home grows will eventually be allowed, however most people won’t go to the trouble if there is a reasonable legal supply (think beer). Home grows will act to counter high taxes, because if taxes are set too high, there will be more home growers and more home grown ‘diverted’ to friends (for a small fee) thus reducing taxes collected.

  • Mark Kleiman

    Pete, you misunderstood what I wrote.

    I wasn’t poking fun at policy analysts who worry about high taxes (and the risk of a continued illicit market). As Sullum points out, I raised exactly those issues when the WSLCB proposed restricting production to indoor-only.

    Now that they’re going to allow outdoor growing, I think the I-502 stores will be able to undersell the illicit market within a year, though not necessarily the medical outlets.

    I was making a perfectly straightforward point: Anyone for whom cannabis at today’s prices constitutes a personal budget problem is either very poor or using a very large amount of cannabis. It’s precisely the same point Phil Cook has made about alcohol taxation: casual users barely feel it.

    [Speaking of “petty and petulant,” see some of the comments above: on the RBC, we try to enforce standards of civility in the comments section.]

    • Duncan20903

      .
      .

      Hey, it wasn’t that long ago that I posted right here on this blog that I thought that you’re the smartest prohibitionist in America. But then I always make an ass of myself when I use too much drinking alcohol.

      • crut

        Alarmist Prohibitionist response:
        .
        “But if legal Cannabis becomes significantly cheaper than Budweiser, a lot of people will switch! Not only that, but they might start fighting with words instead of fists! That would really be scary…”

    • Thanks for the explanation, Mark. I had not read it that way.

    • DdC

      Mark I probably disagree with almost everything you stand for since I know Nixon lied and rejected his own re-evaluations of cannabis, dating back a hundred years. So if the roots are poison, so be the fruit. Making policy on rotten fruit is only logical in the sense of perpetuating the prohibition because it creates jobs and/or profits perpetuating prohibition. As does making policy on vegetables. Can’t tax nature. When some form of punishment is required it profits. Rehab and urine tests or koch tax paid cages. Fines are geared more as income for tight town budgets than actually solving problems. Driving it underground out of sight. Even by herding people out of sight. Still stigmatizing users as beings of a lesser god. It’s a plant, let it be and deal with abuses from adulterations and inexperienced or inadequate grow sites using poison ag products. Like Reagan’s ok for spraying the fields with paraquat. Just say no or die. Expose the bogus crap such as his Monkey Tests and Ford banning Rx research funding and the many red flags that academia has failed to see or deal with. As the media has failed to stay unbiased and independent of government or corporate influence. So I do give you respect for mingling among us mortals. I will hold no animosity toward you and your occupation, well you anyway… Welcome to the couch…

      ❝Like most physicians, Dr. Sanjay Gupta never learned about cannabis in medical school. Until recently, he knew nothing about how cannabis worked on a molecular level, its mechanism of action in the brain and body, its side effects and safety profile. He had not been following the remarkable discoveries of scientists associated with the International Cannabinoid Research Society, which was formed after the first cannabinoid receptor was identified in the brain in 1989. Instead, Gupta took his cues from federal agencies, which maintain that marijuana is a dangerous drug with no medical value.❞
      ~ Martin A. Lee,
      The Potential Miracle Element in Cannabis That Changed Sanjay Gupta’s Mind About the Power of Pot. Author of “Smoke Signals,” discusses the healing powers of the cannabis plant.

    • claygooding

      There will be no “cheap” marijuana until all states have a legal market and it becomes over stocked enough to bring prices down. Then even mmj programs will have large price drops because the market will be on supply and demand instead of black market supply.
      And nobody has explained to me how they intend to stop home growers that can and do grow marijuana for pennies a gram instead want to fill state coffers with $5 per gram taxes.
      And something else Mark,,where do you get your idea that there will be a huge increase in marijuana use because it becomes legal,,statistics from decriminalized countries show a decline in use so what makes the US different?

      • Duncan20903

        Darn it clay, how many times do I have to tell you that it’s just plain cruel to torment a prohibitionist faux legalizer with facts and statistics?

    • Freeman

      Kleiman: [Speaking of “petty and petulant,” see some of the comments above: on the RBC, we try to enforce standards of civility in the comments section.]

      What a crock! The commenters here are way more civil than at the RBC, and I’ve never seen the sort of bigotry that is common from front-pagers on your site here.

      First, what incivility do you refer to, Mark? You do know how to form a link, right? I see nothing posted above your comment that would violate the RBC commenting rules, where commenters are allowed to say whatever they like about the subjects of posts, they just can’t insult each other. You seem to love to make nebulous accusations without any sort of evidence to back it up.

      Second, the RBC “rules of civility” are mostly used as an excuse to suppress dissent, an example of which we have documented here before. Sycophants are regularly allowed to break them at will and have openly called for exceptions to the rules toward dissenters without any push-back from the hosts.

      Third, there have been at least two occasions where you’ve come here and left comments directed at our host which would violate your “standards of civility” at the “RBC” if directed toward you. And still, the comments left by the community here in rebuttal to your insults were civil. Show us an example of anything close to that happening at your oh-so-civil-and-superior blog.

    • darkcycle

      I’ve seen your civility.

    • N.T. Greene

      I had not read it that way because, well, it isn’t written that way:

      “Naturally, true-believing libertarians insist that cannabis legalization be done in the way likely to generate bad outcomes. Taxes BAD! Regulations BAD! “Commercial speech” is SACRED! The free market FOREVER! And of course drug abuse is a merely imaginary problem, so cannabis is just an ordinary commodity that the market will handle perfectly.”

      I thought this was a joke quote, and when I went to the source article I was pretty disappointed to find that it was really in the article.

      That’s also a straw man. And I really, really do not like it when people in high places use fallacious arguments for the apparent purpose of inflaming their audience. Come on, you’re a professional. Sure, you include links down below this, but let’s follow them, notably: “According to one BOTEC projection, the after-tax retail price of marijuana in that state, which is imposing a 25 percent tax at the farm, wholesale, and retail levels, will be something like $482 an ounce. Another estimate, based on a higher production cost, puts the price of an ounce at $723. Those numbers are far higher than the prices reported by current marijuana buyers in Washington and Colorado… If the actual prices are anything like the projections, concedes BOTEC CEO Mark Kleiman, ‘that’s a big problem.'”

      Imagine how surprised I was, when your comment that included the link was “Jacob Sullum has elevated the temporary risk that relatively high taxes starting will slow down the migration from the illicit to the licit market into an existential threat to the legalization project, and is more or less encouraging Colorado pot fans to double-cross the rest of the voters by rejecting the taxes that were the premise of last year’s legalization push.” Did you forget that at the end of that article you are quoted as conceding that, if the prices did meet those projections, it would be problematic? Did you forget that it was your OWN FIRM that made those projections? Oh, and let’s not forget that the oldest article involved here is but four days old. Do you have data to support your modified argument (that you make no mention of in your Oct 17 article)?

      I am sorry to rant. I work long nights and I get impatient. And you can just ask my mates here, I have very little patience for logical fallacies (though no one is perfect).

      One more thing: Uhh, this isn’t about making cannabis “more affordable”, it is about undermining the black market which will persist if it is not undercut enough by the legal market. So if the state -drives up- prices, they will likely make some sales for convenience’s sake… but there will be a large black market that, thanks to loosened or eliminated enforcement on general possession… will be even harder to prosecute! It’s ironic that this great progress in the war against the already-greedy drug dealers could easily be undone by the greed of the state.

      …I’m gonna take a nap, you guys have a nice day. feel free to revise me as it’s all ranty.

    • Matthew Meyer

      With respect, it seems to me that you’d have more interesting discussion at RBC if you did slightly LESS “enforc[ing] standards of civility in the comments section.”

    • Windy

      Mr. Kleiman, the street price of cannabis, now, is the same as the cost at the dispensaries (or lower, depending on the quality of the weed). So, if the recreational cannabis outlets do not match or go lower than the cost at the dispensaries, they will never be able to “undersell the illicit market”.

  • DdC

    CelebStoner ‏@CelebStoner #mmot
    What Would You Pay for Legal Weed?
    @DougMcVay’s blog about #marijuana taxes & prices in Washington State
    Washington State – When Congress banned marijuana in 1937, it did so in the guise of taxation, imposing a prohibitive levy on cannabis and created criminal penalties for those who failed to pay it. Marijuana taxes also played a prominent role in what may be the beginning of the end for pot prohibition: the legalization measures that voters in Colorado and Washington approved last fall.

    Neill Franklin ‏@NeillFranklin
    The US and UN could use a drug management lesson from New Zealand.
    True solution oriented thinking.

    Russ Belville ‏@RadicalRuss
    2-Year-Old Dead After Finding Loaded Handgun In Home No charges, but if it was a pot plant, parent would be in jail.

    @RadicalRuss YouTube
    CPS Whistleblower Exposes CPS’s Corruption, Kidnapping, and Drugging of Children

    Ganjawar and Child Protection Racketeering

    • DdC

      Marijuana Heroes™ ‏@MarijuanaHeroes
      Things happening around us -> Modesto, CA: Families Plead for Legal Medical Marijuana for Sick Kids | Video

      … just in the nick of time…
      an ingestion method for sick kids…

      420 Magazine ‏@420Magazine
      Port Richey Inventor’s Magical Butter Machine Gets ‘High’ Marks

      Oh those stoner entrepreneurs always make me smile….

      http://magicalbutter.com/

      Medicinal Marijuana Stops Seizures
      Brings Hope To A Little Black Forest Girl

      Probably better put as Little “Black Forest” Girl and not a little AA girl living in the woods.

      • DdC

        I wonder about the numbers since in 42 or so years of toking I’ve never been ask. I’ve never met anyone who has been ask. Growers I know or buy from don’t keep sales records. Like figuring future economics without the underground economy, under the table jobs and black market incomes and what they spend. All leading to an increase in numbers if people start buying it on record. Translated to an increase of users see i tollya so. Ditch-weed still makes up most of the eradications, more big fuzzy numbers to show how they saved’d us and how utterly indispensable they are.

  • strayan

    Crossposting my comment:

    “Legal cannabis will naturally be much, much cheaper than illegal cannabis.”

    It is imperative that the production costs of cannabis are reduced. The lower the costs, the less customers are worth fighting over.

    Why do you think there is violence in the drug trade?

    http://books.google.com.au/books?id=0hs-8dPDlyEC&lpg=PA307&dq=drug%20prohibition%20corruption&pg=PA317#v=onepage&q&f=false

  • Jose79845

    It’s not a tax, it is a bribe and probably well worth it to stay out of jail.

  • stlgonzo

    OT: LSD Did Not Kill Her, but It Looks Like Prohibition Did

    Another good piece by Mr. Sullum

    http://tinyurl.com/lw8ctcz

  • Duncan20903

    .
    .

    The heck with this nuthouse, I’m moving to Uruguay. All they want is proof of $750 a month in income.
    Uruguay Will Sell Legal Marijuana For $1 Per Gram, Official Says

    Why the heck do all the Kleimans have to make so frackin’ complicated? Oh wait! The more complicated it is, the more hours you can bill! Silly me.

  • kaptinemo

    OT, but of interest: Looks like ol’ Kevvie’s gonna have a hard time swaying this crowd: Florida marijuana legalization debate expected to draw large crowds, protesters.

    The people in the front row should get geared up like the attendees of the old Gallegher comedy shows; the BS that’s sure to fly from Kevvie’s pie-hole will be vastly more messy – and smelly – than any ‘Sledge-O-Matic’ally impelled watermelon rinds.

  • NYCRocks

    Late to the party. Let’s cut to the chase: Kleiman matters in how laws are made and no one who comments or blogs here does. You are jealous which is understandable…but that kind of goes with being losers, doesn’t it?

    • It seems to me the the loser is the one who comes here and insults people anonymously with a fake email. At least Mark Kleiman is willing to put his name on his comments.