California: The New Amsterdam

http://newsoftheweed.blogspot.com/2009/02/california-considers-50-oz-tax-on.html

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/23/BAO416354C.DTL&tsp=1

The proposal would regulate marijuana like alcohol, with people over 21 years old allowed to grow, buy, sell and possess cannabis – all of which is barred by federal law.

$50 an ounce tax

What do you guys think?

The tax is a bit annoying, but other than that this seems pretty cool. I wonder when that federal law will get dropped? Some people seem to think obama is going to legalize it on the national level, but I’m unsure =\

Still an interesting law, it’ll be interesting to see what happens in regards to the law enforcement.

50 dollars an ounce is an outrageous tax.

Well, if the goal is to limit it towards commercial or medicinal applications then the tax would help force the issue in that direction.

Nothing is going to stop people from getting it the way they have been all this time, it being legal just means they will be seen high more often, not get high more often.

Orzo, if you can buy an ounce of questionable quality and questionable contents(is it laced with something that is addictive/dangerous? How the hell can you be sure?) for $150, or an ounce of legally grown and assured quality/contents for $100, which are you going to buy?

Granted, I know nothing of the actual prices, that was just an example. If the price is lower on the legal stuff, everyone will go there.

I’d personally rather get something I’m sure isn’t laced even if I have to spend a little bit more; the assurance that I’m not going to freak out or have an unwanted trip on something harder is much more comforting than a few dollars.

I can assure you that “legal” marijuana would not be CHEAPER than street.

Originally posted by Kyru:

I can assure you that “legal” marijuana would not be CHEAPER than street.

It would be taxed to hell, for a start.

I can assure you that “legal” marijuana would not be CHEAPER than street.

Oh really? I’m fairly certain legality of marijuana would drive prices down quite a bit, as there would be no more danger in selling it, which is currently why it’s so expensive.

Safety is a biggie too, once again, you never know what you are getting from a street dealer.

The taxes on legal marijuana is a bit much, 50 for an ounce, I can only pray they lessen or get rid of the tax.

The taxes on legal marijuana is a bit much, 50 for an ounce, I can only pray they lessen or get rid of the tax.

Why? Taxes have to be applied somewhere. Why shouldn’t they be put on unnecessary luxuries rather than things that are actually necessary?

Legally produced marijuana most likely cost MORE because of the taxes, production funds, labor costs, shipping and distribution costs, operating licenses, and that’s only the basics.

Not to mention brand labels.

I would highly suggest that you do a bit more research into how the economy works.

I would highly suggest that you do a bit more research into how the economy works.

I’d love to. Could you point me in the right direction(links are best, though I can probably bring myself to read a book about economics)?

Why? Taxes have to be applied somewhere. Why shouldn’t they be put on unnecessary luxuries rather than things that are actually necessary?

Are you proposing that we get rid of taxes on anything that is deemed “necessary” and add heavy taxes on luxery items?

This should be enough for a surface-level understanding of the points I presented.

http://ohioline.osu.edu/cd-fact/1326.html

Alrighty, so legal marijuana would cost more because of production, labor, and distribution costs. Why doesn’t street marijuana fall under the same problems?

there will have to be taxes&insurance/permits paid for everything wich wasn’t before.

Alrighty, so legal marijuana would cost more because of production, labor, and distribution costs. Why doesn’t street marijuana fall under the same problems?

Because illegal marijuana does not have to go through packaging, worker unions, shipping costs, or any of those business positions. You really think if they made marijuana legal, the legal companies would sell it in plastic baggies person to person?

Illegal marijuana will always be easier to produce, easier to distribute, and cheaper; the people begging for it to be legalized are only fighting to legalize it just to fight.

Preface: I’m not an economist.
I’d assume the marijuana business would be an economy of scale and that the legalization would open the door for significant expansion by people with more efficient means of production. That should, then, drive marijuana prices down in general. The only problem that seems to arise here is if somehow the cost of production per unit doesn’t manage to fall far enough to make up for the taxes and any regulatory requirements that companies need to obey, and so the legally produced marijuana, produced more efficiently and at a larger scale, would still only be available to consumers (after tax is included) at a price higher than the street price. In that case, I think you could still expect a decline in prices in general, because of the increased availability, and presumably because people would have some more trust in established companies operating legally rather than selling on the street and evading taxes, and so would be willing to pay some premium. The street dealers would then need to adjust prices to compete and make up for the lack of trust that their legitimate competitors have. Even if people are able to just legally produce it, that would significantly lower the risk in at least that area of production of marijuana, and so even if the product is sold illegally (to avoid the taxes) the price should still be lower. Maybe?

In any case, I don’t see how the street price could ever be higher than the legal price, for like, most products. Even if we ignore the question of how much it’s going to cost to produce something illegally or legally, why would anyone buy from a street dealer when a cheaper legal version is available? The street price should stay below the legal price if for no other reason than that people aren’t going to go to a shadow economy to make their purchases when they can already get the product both legally and more cheaply. The only reason I could see for that would be if they felt that there was some inherent danger in purchasing the product from a legal source, if there were some additional costs beneath the surface (maybe some social stigma or difficult process involved in being able to make the legal purchase), or if they were actually offering two separate products, and the street one was valued higher. I expect we’d see a similar situation as we already have with legal products: you can go buy a TV from BestBuy for $700, or you can buy one that “fell off the back of a truck” for $450; you can go buy a pack of cigarettes legally and pay the tax, or you can buy one from the dude who stole a carton and is selling the packs separately now untaxed.

I think this is a great way to give the economy a bit of a boost. All those rich guys are going to pump money back into the markets which will (hopefully) help improve it a bit.

Originally posted by matt:

Preface: I’m not an economist.

I think you could still expect a decline in prices in general, because of the increased availability, and presumably because people would have some more trust in established companies operating legally rather than selling on the street and evading taxes, and so would be willing to pay some premium. The street dealers would then need to adjust prices to compete and make up for the lack of trust that their legitimate competitors have.

People have dealers now, and just because other companies start to legally produce it, does not make the current dealers less trustworthy. Also anyone interested in picking up the drug are going to go through friends, not strangers, this means that they will already have trustworthy contacts. Marijuana does not have the same viciousness as the other drugs such as cocaine or heroine have; the dealers don’t spike or lace their product nearly as often, so your theory of safety is void when talking about the mary j.

Also anyone interested in picking up the drug are going to go through friends, not strangers, this means that they will already have trustworthy contacts.

If marijuana was manufactured and sold legally, then this would not necessarily be true.

I can assure you that this will only lower the level of illegal sales of marijuana. $50 is insane… and so are the people who will pay it. I don’t see a real problem with it s long as strong rules are applied to it. I really don’t care what the marijuana activists say. I’ve tried alcohol, and I’ve tried marijuana. I’ve even tried them both at the same time! Marijuana definitely has more of an effect on the body when used correctly. Whether its out of a “tinny” or out of that $80 bong your buddy just bought, it impairs you to a much higher degree than one may be at a .08 intoxication level.

Originally posted by Kyru:

I can assure you that “legal” marijuana would not be CHEAPER than street.

Having the ability to grow it and ship it within the states and opening the market to big businesses will in no way drive down the price? Interesting assumption.

Legally produced marijuana most likely cost MORE because of the taxes, production funds, labor costs, shipping and distribution costs, operating licenses, and that’s only the basics.

You realize the same costs apply to those things that are illegal right?

Let’s compare:

Taxes = Bribes
Production Cost = Hiding from / Fighting Authority Cost
Labor Costs = Labor Costs
Shipping and Distribution Costs = Smuggling and Bribing Costs
Operating Costs = Paying off the big cartel Costs

If you are going to argue economics try to realize that everything, legal or illegal, has costs associated with it. The taxes and such can easily be modified to be competitive with the illegal market.

If Marijuana were made legal, it would become very very cheap. It’s one of the most fast growing crops in the world, is highly bug resistant, and the entire plant can be used. A full legalization of Marijuana and Hemp would see an amazing surge in the usefulness of the highly versatile material. It will very much match the tobacco and plastic industries. Considering a single cigarette of weed costs Anywhere from 5 to 10 dollars on the street, the comparative price of mass production would be astronomically cheaper.

After reading the above posts, I can’t believe how ignorantly this concept is being looked at.

A majority of weed comes from small gangs in America, since theres so little money in it for larger gangs. Thus, when a gang becomes big, it no longer deals in weed, thus all of the low level operations are overpriced and highly based on availability. Their product is usually purchased at a very low price from out of America, and then sold to lower and lower chains in the gang for more and more so that each person can make a cut. When it reaches the average guy (Heck, the Average dealer isn’t even gang related) it’s passed so many hands that the price is almost 600% the wholesale value. Were Marijuana legal, all of this would be bypassed, and major operations with machinery and processing and distribution could be developed for pennies by major corporations. Furthermore, the Marijuana plant would become a lot more commonly sold for gardens. It’d be foolish to Buy weed when you could grow it in your garden for pennies.

That is half the problem. Anything that could cut into the profits of certain large businesses will face a great many hurdles to legalization (Stevia anyone?).

They really should legalize it, i know a lot of people that really need to chill out.