When campaigning for the passing of Washington’s Initiative 502 and Colorado’s Amendment 64, supporters of the now enacted laws were boasting how the legalization of marijuana for recreational purposes could generate much needed tax revenue. But now that tax limits are being decided upon, the high taxes that will be added onto the marijuana’s actual production costs may perpetuate the black market as opposed to bringing an end to prohibition at a state level.
According to a summary from BOTEC Analysis Corporation, Washington’s proposed taxes will make the retail cost of marijuana 58 percent higher than it would be otherwise. One of BOTEC’s predictions indicates the after-tax retail price of a gram of marijuana will be $17, which equates to $476 per ounce. Said prediction bases the production costs of each gram at $2, with yet another summary calculating the costs at $3 a gram.
According to the Price of Weed’s website, which is a site that collects datum from marijuana consumers nationwide, the price for a high-quality ounce of the kind in the state of Washington would cost you approximately $239.
In a nutshell, if BOTEC’s projections are accurate, the end price for an ounce of state-authorized bud will be nearly two to three times as much as purchasing a sack from the black market.
“That’s a big problem,” Mark Kleiman avowed, adviser to Washington’s marijuana regulators. “The legal market is going to have a hard time competing with the illegal market, but a particularly hard time competing with the untaxed, unregulated sort-of-legal market (medical marijuana).”
Supporters of the marijuana taxes contend that they’re required in order to fund an effective regulatory system, which in turn will assist in dispiriting intervention from the federal government.
Denver attorney and longtime marijuana activist, Rob Corry, argues that disproportionately high taxes will challenge the tax guidelines by propagating the black market. “Over-taxation creates a marijuana market ripe for takeover by the unregulated, untaxed, underground market,” Corry explained.
Legislators in both Washington and Colorado still maintain the powers to adjust the final tax rates, but greed could play a vital role in terms of the willingness of said legislators to reduce the rates. Will high taxes pose a threat to the success of these newly enacted laws? Only time will tell.