How Much Should A Joint Cost?


Christopher Matthews ponders the optimal marijuana tax:

The ultimate goal for opponents of marijuana prohibition is federal legalization. But any serious reform of federal marijuana policy will most certainly include a hefty federal excise tax as well in order to 1) help fund regulatory mechanisms; and 2) garner support from lawmakers who would not otherwise be disposed to reform. Oregon Representative Earl Blumenauer, for instance, has introduced marijuana reform legislation that would enact a 50% excise tax on production.

Proponents of legalization understand that healthy sales taxes are a great tool for furthering their cause. At a certain point, however, high taxes will encourage an illicit market. Where is the line? It’s difficult to know for sure, but if a 50% tax were enacted on the federal level, the marijuana industry in a state like Washington would face at least $1.92 in tax for every $1 of product sold. Whether this level of taxation is enough to encourage a black market is difficult to say.

He goes on to note that prices are also driven up by regulations. Along those lines, Jacob Sullum fears that Colorado will make marijuana sellers follow the 70/30 rule, which would require retailers to grow 70 percent of their product:

Amendment 64 declares that “marijuana should be regulated in a manner similar to alcohol,” which is hard to reconcile with a requirement that retailers produce 70 percent of what they sell. Jack Finlaw, co-chairman of the Amendment 64 task force, observed at Tuesday’s meeting that “if you read Amendment 64 in its entirety, this [recommedation] is going in a pretty dramatically different direction, and I think we need to be prepared to answer questions from the public about embracing a model that is the antithesis of how we regulate alcohol.” Supporters of the 70/30 rule draw an analogy to brew pubs or wineries that sell directly to consumers, but in neither of those cases is everyone who sells the product required to make it; you can still buy beer and wine from retailers who had nothing to do with producing it.

(Image: United States Special Tax Stamp — Producer of Marihuana — July, 1945. “It was probably related to the U.S. Hemp for Victory campaign, which allowed production of hemp for the U.S. WWII effort,” via Wikimedia)