The Tax That Killed the Golden Goose

Pot Farming in California

Liberals really are simple shits. Hey! Let’s legalize marijuana. Legal marijuana operations will drive illegal marijuana operations out of business. The state can regulate and tax the legal marijuana industry. It’s a win-win!

If the premise is faulty to begin with, the result will never live up to the promise.

Here’s a snippet of some of the expenses currently being absorbed by California consumers as legal cannabis moves from seed-to-sale:

  • State taxation.
  • Local taxation, which could have a few added percentage points, depending on the city.
  • The aforementioned 15% excise tax.
  • The cultivation tax that’s entirely dependent on the stage of plant being taxed.
  • Quality control testing.

Hefty marijuana taxes that can approach 50 percent in some communities have been blamed for pushing shoppers into California’s tax-free illegal market, which is thriving. Industry analysts estimate that $3 are spent in the illegal market for every $1 in the legal one.

It turns out that consumers don’t care if their pot is legal or illegal. The determining factor is price. Because of taxes and regulations legal growers can’t compete.

Here is a case of the pot calling the kettle black. Legal growers are screaming for increased enforcement activity against illegal growers. This isn’t just a California thing. Marijuana is sold through Ontario government outlets. It is losing money, at the link:

Consider the difference between legal and illegal pot sales. Legal pot sales are highly regulated. Illegal pot sales are not. Legal pot sales have the resources of government. Illegal pot sales operate in spite of the government. Legal pot sales involve CPA’s, business leaders, government regulators, politicians and all sorts of experts. Illegal pot sales are run by people that may or may not have finished school. Chances are they haven’t drawn a sober breath in decades. Illegal pot sellers view buying Michael Jordan sneakers in every style, as an investment opportunity.

The biggest difference? Illegal pot sellers make a profit.