It costs $400 to grow a pound of Marijuana. There are 16 ounces in a pound. Cost per ounce = $25/oz.
Street price of Marijuana = $75/oz or $1,200/lb.
Price of tobacco = under $20/lb.
You do the math. OK, I’ll do it for you. Tobacco is 1/60th the street price of black market Marijuana.
If we legalize Marijuana, the street price goes down from $1,200 per pound to maybe $60 per pound, or 5 cents on the dollar.
I was calling the politicians IDIOTS for basing their revenue projects on the black market street price for Marijuana of $1,200/lb rather than the expected legal price of $60/lb, or even $20/lb when every mom and pop grows this stuff in their backyard and sells it at local flea markets.
OK?
The politicians are idiots to think that legal Marijuana is going to be a $14 billion industry. That is my point. They are idiots.
As for demand, I’m not buying your argument so we’ll have to disagree. Even if demand trippled, but if the price is 1/60th, then street value is 1/20th of $14 billion or $700 million. Add a 20% tax and California govt gets $70 million, as if that will close a $42 billion budget shortfall.
*cough* Bull$hit
The proposed law calls for standard sales taxes plus an excise tax of $50 per ounce. I don't think this law will pass, but eventually I think the feds are going to open things up and allow states to legalize marijuana, and I fully expect to see excise taxes plus sales taxes like we see with tobacco and alcohol. They're going to prop the prices up that way, and as long as they don't go too crazy it won't encourage a black market because most people are going to want to go to the “pot store” and choose from a wide variety of quality product at reasonable prices, product that has been produced in a regulated environment. They are not going to want buy product with who knows what on it from criminals if they have that choice. Black market product will have to be considerably cheaper than store bought for there to be any black market for marijuana of any consequence. Like you said, prices will drop dramatically, so there will be a lot of room for taxes before the cost to consumers gets anywhere close to what they are paying now for black market product. Black market producers would have to be willing to accept a whole lot more than they get now for their product from the few people willing to buy it. It's not going to be worth the effort and the risk involved. Even with high taxes, I doubt we have much more of a black market for marijuana than we have for alcohol.