Skip to comments.Can Marijuana Help Rescue California's Economy?
Posted on 03/13/2009 9:53:06 AM PDT by Melinda
Could marijuana be the answer to the economic misery facing California? Democratic State Assembly member Tom Ammiano thinks so. Ammiano introduced legislation last month that would legalize pot and allow the state to regulate and tax its sale - a move that could mean billions for the cash-strapped state. Pot is, after all, California's biggest cash crop, responsible for $14 billion in annual sales, dwarfing the state's second largest agricultural commodity - milk and cream - which brings in $7.3 billion annually, according to the most recent USDA statistics. The state's tax collectors estimate the bill would bring in about $1.3 billion in much-needed revenue a year, offsetting some of the billions in service cuts and spending reductions outlined in the recently approved state budget.
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I live in CA. You may know the “medical marijuana” situation here.
I went to juvenile court with my son who got a ticket for wearing half a seat belt. He had just had surgery on his neck and the ticket was bogus. Because he was a minor I had to go with him to protest. So there we were.
They called up young man after young man, probably ten of them in all, ranging from 18 I guess to 25 or so. Each had been ticketed for possession of a small amount of pot. Each one shuffled up with a note from their “doctor.” Dismissed, dismissed, dismissed. The judge was disgusted. He told them he knew the names of the doctors who’d write prescriptions for a small fee. He said he’s never seen so many young able-bodied men in need of prescription medicine. He said they should get to know some people who are really in need of medication for real problems.
Those young men were a very sad waste of people. I have three sons, and nothing is stronger than a young man that age. But those dumbbells were hunkering up there like ground up weasels. What a waste.
I don’t know how many times you’ve been around the block, but the fact is, most of us do not want to be cited, fined, jailed, embarrassed, or have drug type offenses but on our records. It really is a deterrent for us. Were marijuana legal, I do believe its use would dramatically increase. Maybe you think that is ok. I don’t.
Illegality is what puts the "cash" value in marijuana as a cash crop. Nicotiana tabacum, in the form of Burley tobacco, used for cigarettes, gets a farmer about $1.75 a pound, after drying.
What is Cannabis sativa going to fetch the farmer when it is just another cash crop? More than tobacco? Certainly at first, but for how long?
Today, somebody used to paying $100 an ounce for "cheap" marijuana, and many times that for hydroponically grown, high THC stuff, might think that a $50.00 an ounce tax, (as proposed in Sacramento) in exchange for legalization, is a great deal. Certainly the knowledge that you won't be arrested, or shot in the head, tryuing to buy dope is worth a lot, and the tax will bring in some money the first few years.
But when the untaxed crop is selling for, let's be crazy and say 10 times as much as tobacco, or $17.50 a pound, how great will a tax of $800 a pound seem then? A tax on retailers under the bill under proposal in Sacramento.
Hmmm. If a guy buys weed from a legal retailer, 97.5% of the dealer's raw material cost is for excise tax. If, on the other hand, the weed buyer buys from a production chain that doesn't pay taxes, well he can pay his non-taxed supplier $408.75 a pound for non-taxed weed, or 23 times the $17.50 a pound the farmer in the tax paid distribution chain gets (which is, remember, 10 times what the tobacco farmer gets), and still pay just half the product cost (much less selling price) of the the legal, taxed retailer.
That doesn't sound like a formula for a vast influx of cash to the State coffers. It sounds like changing the offense for marijuana possession to a revenue crime.
Remember all those movies about moonshiners in the 50s, 60s, and 70s? The Federal Excise Tax on distilled liquor was $12.50 a proof gallon, or what, 50-60% of the retail price of rot gut at a licensed, taxed liquor store? This tax is 90%+. Any bets on whether the State of California (again, after a brief burst of revenue) spends more on beefing up its revenue collection efforts than it actually collects at $800 a pound?
So then it’s not the negative effects of the drug that deter you, your friends and your family from smoking pot, it’s simply that pot is illegal and you don’t want to break the law?
So if pot were legal you, your friends and your family would smoke it?
Dutch drug policies do not increase marijuana use, first rigorous comparative study finds
The study was funded by the U.S. National Institute on Drug Abuse (NIDA) and the Dutch Ministry of Health.
“Pay for a round trip ticket to Phoenix returning the same day and pay in cash. I guarantee you will not leave that airport with your money because the DEA or the cops WILL take it from you and claim that you MIGHT be doing something involving drugs.”
You can control something if people want it, you just may not be able to eradicate it. LOL, having paid cash for a ticket once, I simply got a personal escort to the ramp. I didn’t mind at all, and would rather live that way than live in a legalized drug society. Been there, done that, and it isn’t preferable to me by a long shot. I suggest anyone who advocates for legalized drugs do the same before they suggest it for America. It will be our kiss of death.
What "legalized drug society" did you live in?
I’ll trust your word.
I have a hard time growing a good tomato.
Homebrewing beer is a GREAT example!
Homebrewing works fine but it’s difficult to get good to excellent results (the voice of experience here) so it’s much, much easier to go to the packie. (New Engand localism ... sorry. Make it “the liquor store.”)
With that in mind, the price of commercial reefer would hold up fairly well against homegrown, minus the talented hobbyist. And that makes the tax revenue more stable and therefore more attractive.
Of course, we could always ask WHERE IN THE CONSTITUTION DOES IT GIVE THE FEDS THE POWER TO OUTLAW MARIJUANA? But that’s a story for another day.
Yeah, but that is with the "medical" farce, and the very real danger, until our new President was sworn in, that large scale growers would wind up in Federal prison.
What will it sell for when it has been legalized for years. When Monsanto (or some other big company) sells marijuana seeds in 50# sacks, and big corporations plant it not by the acre, but by the square mile. And when it is not smuggled to market, but loaded on railroad cars?
Sure, some folks will pay a premium for quality, just like you can pay $13 for 750ml of industrial grade vodka, or $350 for 750ml of 25 year old Scotch.
My point is that the price of marijuana is overwhelming attributable to the risk premium, and to the economic inefficiencies attributable to its illegality. Legalizing marijuana with a $1 an ounce tax would take most of the incetives for illegal production away. Legalizing marijuana with a $50 an ounce, $800 a pound, tax, just puts a cap on how much the illegal, non-taxed, retailer can charge, just as the $12.50 a gallon federal excise on spirits put a cap on how much the seller of moonshine could charge.
At $800 a pound, the tax on 500 pounds of marijuana would be $400,000. Plenty of incentive for smuggling.
I agree. Decriminalizing drugs will take away the incentive for criminals to deal it, just as ending Prohibition did with alcohol.
If someone wants to shoot up or smoke their brains out, have at it.
It's hard to compare pot to beer, because that gram of pot might have seeds and stems in it no one smokes and it might have low THC levels, or it might be high grade stuff with no seeds and no stems that is two or three times or more stronger than the seedy stuff. And, some people only need a little to get a buzz or to get really stoned whereas it might take another person a lot more to get the same effect from the same product. It affects different people differently. But I think it is safe to say that a gram of pot will provide the average person with several smoking sessions. A couple of decades ago the government did studies and found that the average marijuana dose was around a third of a gram, and it is stronger on average today so the average is probably a good bit less than that now. It is not really all that uncommon for people to consume a six pack of beer or more in one session but it is rare that someone will consume an entire gram of marijuana all by himself in one session. A gram of even cheapo Mexican is generally enough for several highs, and the average person could get several more buzzes from a gram of the really expensive stuff. The average gram of pot I would think would have to be equivalent to at least two or three six packs of beer, if not more.
That $50 excise isn't the only tax people would pay in the unlikely event this law passes. They'd also pay regular sales taxes. Depending on the price of per gram those taxes would probably range from a few cent per gram on up to a couple of bucks a gram. So even if a gram of pot is only the equivalent of two six packs on average then the tax burden on pot would still be less than that for beer on average even if grams of pot end up costing from $5 to $20 each depending on quality.
You said in an earlier post that tobacco is around $1.75 a pound. I think that's the price for Burley, but there are others that are more expensive. Generally I believe it's going to be less than $3.00 a pound when the cigarette company buys it though. A pound of tobacco will make two cartons of cigarettes so you are paying about $50 a pound when you buy smokes at $5 a pack. If we were to legalize pot prices would drop way down. I doubt bulk wholesale costs would go as low as tobacco though because there is a lot more labor involved in clipping each bud off and trimming them up for sale. I don't know how much of the process they can mechanize. Still, it should be a whole lot cheaper right away in a completely legal environment and it's going to be dirt cheap after a few years of being legal when big corporate producers get their systems dialed in and slash production costs. The only way pot is going cost even half what it costs today is with really high taxes.
I don't think this California law will pass, but eventually I think we'll legalize pot in this country and regulate production and sales similar to the way we alcohol. People are going to want to buy their pot from the “pot store” where they will be able to select from a wide variety of quality product at reasonable prices. In a legal environment people won't want to buy black market pot from criminals that has who knows what on it. They'll want the stuff that has been produced in a regulated environment. For black market product to sell, it's going to have to be considerably cheaper than what they can get at the store. There shouldn't be much a black market because it's not going to be worth it for criminals to go to all the effort and risk involved. There won't be nearly the market for their product and they'd have to sell what little they'd be able to sell at a fraction of what they sell it for today. I bet we wouldn't see much more of a black market than we have with alcohol now.
“It works out to about $1.76 a gram, which is lower than the national average tax on alcohol.”
I meant to say lower than the national average tax on a six pack of beer.
They can all get stoned and forget about all their problems!
Those Mexican drug trafficking organization, they'd shrink down to something far less powerful and far less of a threat. They already supply almost all the cocaine, meth and heroin in this country. It's not like there is much of that business left for them to take over. Marijuana provides them better than 60% of their income according to our government, and the marijuana trade with it's vast distribution networks that reach every corner of America makes it easy for them to move those other drugs because they just piggy back them in on top of the marijuana and push them through some of the people selling their marijuana. If we take the pot business from them they'll lose their biggest money maker and it will be harder for them to move their other drugs. We should have legalized marijuana a long time ago.
She didn't live in a “legalized drug society” because there aren't any. The closest thing we have to that is the Netherlands where they have shops that are allowed to openly sell marijuana, and per capita marijuana use there is only about half what it is here. And of course pot isn't really legal there, it's just the government's policy to allow possession and for people to grow a few plants and to allow these shops to operate, but the shops must buy their product from the black market which of course encourages organized crime to get in the game. If it was really legal there, commercial production as well as retail sales, they wouldn't have the organized crime problem.
I’ll pass on the subject of legalization. Lets talk money.
Pot is a $14 billion industry because it is illegal. Pot prices are based on black market prices. Legalize pot, and the street price falls to 5 cents on the dollar, because seriously, how much does it cost for seeds, water and fertilizer. The cost of pot is no more than the cost to grow tobacco.
So legalize pot and the $14 billion industry goes to a street price of $700 million. Taxes on that will bring in MAYBE $150 million, if they hit it really hard.
Idiots. They have absolutely no capacity to analyze.
This doesn’t include any money they would have to spend to regulate this new industry. Are they using banned chemicals? Are they growing pot near endangered species. Do cartons of pot have all the requisite pregnancy warning labels, addiction, cancer, etc.
Idiots. Clueless bloody idiots. Drill for oil off the coast and they would flood their coffers.
Yes, with “legalized drug society”, the word “virtual” should be in front of “legalized”. But it’s just a matter of semantics there.
“If it was really legal there, commercial production as well as retail sales, they wouldn’t have the organized crime problem.”
Organized crime would simply disappear? Hardly.
“Organized crime would simply disappear? Hardly.”
With billions of dollars less money they would be correspondingly smaller and less of a problem.
The country is one of the if not THE world’s leading producer of Ecstasy and also heavily involved in illegal arms trade. Drawing a line after marijuana will not solve any of the lucrative crime problems, and will add to the non-productiveness by legalizing mind-wasting.
The country I’m referring to in the last post is the Netherlands, not Morocco.
You think the statistics about drug use in this corrupt nation are accurate? LOL! I don’t mean to be rude, but really, that’s laughable in a country that will confiscate reading material upon entrance if it contains any negative truth about it.
Just don’t sell them on the internet. THAT is still illegal.
When I was young and stupid, I smoked pot.
There are times today when I would really enjoy it again. I always liked the effect better than alcohol.
Yes, if it were legal I would smoke again. In a heartbeat.
I'm linking you to the consumption estimates from the 2008 UN World Drug Report. Scroll down to pages 276 and 277 to see estimates for cannabis use prevalence for person 15 through 64 the US, Europe and Morocco.
That's what I thought too, until I met some people that smoke. 2 jobs ago, I was working with a very young crowd - audio equipment. I got to know alot of them and found out these teenage/young 20's clowns were bringing it to work. They'd go down the building's back stairs to smoke a J in the smoking area DURING WORK HOURS. And it wasn't a secluded place either.
Yea, it is being gotten and smoked by anyone that wants it.
I'm inclined to believe that those that dont currently use it based SOLELY on the laws just MIGHT be inclined to give it a shot.
I wont call YOU an idiot though.
I hope they catch you with that crap and put you in prison!
It would seem to me this reliance upon government control of personal behavior is also immoral and a violation of the individual's liberty and pursuit of happiness.
I agree. We cannot live in a society that wants to keep mind altering substances around for its population to keep itself in a stupor. Anyone who believe in keeping anything like that legal is immoral.
Now excuse me while I go to a bar and have about 10 shots of Jack Daniels.
Amsterdam had a murder rate of about 3.6/100,000 in 2007¹. San Jose, one of the safest US cities with a population over 500,000, had a murder rate of 3.5 in 2007². Overall, the murder rate in the US is nearly 4X the Dutch rate.³
They won’t because I don’t smoke that crap. I just want it legal and the state out of the businesses of wasting it’s time going after smokers who aren’t hurting anyone, ya drunk!
At least you are buying American. :)
Right, the Dutch just export their drugged-up murderers to Aruba. I wouldn’t ever trust statistics, especially those of a foreign country. Besides, they are expert at manufacturing and marketing dangerous drugs. That alone is a reason to make sure those statistics remain low for all to see.
Judging from your past posts, you seem to have more than a passing interest in legalizing pot. Obsessive maybe.
In California it really is pretty close to being legal already. It's been decriminalized there for decades. If someone does get caught they get a ticket. They've had medical marijuana there since 1996, and we know anyone can get a medical marijuana card if they want one. But, per capita marijuana use in California is only slightly higher than the national average. Use by those 12 to 17 years of age is actually slightly lower than the national average. There are several states that have not decriminalized and that do not have medical marijuana where per capita use of marijuana is higher. The laws don't have much impact on the percentage of people who will smoke pot.
When we think about laws from the perspective of the science of criminal justice we think about deterrent effect. What influences the level of deterrent effect are things like the severity of the punishment for breaking a law and something most people don't even think about, and that is the level of risk of getting caught by those who contemplate breaking a law. That last one is really the biggie here. The fact is that most pot smokers will never get caught provided they are just a little bit careful. Most all the transactions and use of this drug go on behind closed doors or somewhere where no one but the participants are going to see it. Well over half of all murders will result in an arrest. Probably one in several thousand “pot smokings” result in an arrest, and usually it's because the pot smokers was doing something stupid. We do have something like 700,000 people arrested in this country for simple possession of pot every year, but that only re[presents a very small percentage of pot smokers and I can tell you that from many years of working in the criminal justice system, and I've worked both as a prosecutor and a defense attorney, a lot of these people getting caught are getting caught over and over again, because they are idiots. A lot of them are criminals who are always getting in trouble for something who happen to break the marijuana laws along with all their other law breaking, or they're stupid young people who think it's a good idea to drive around in their cars smoking from three foot bongs or something like that. They're idiots. The vast majority of pot smokers will never get caught, even if they are regular smokers for decades.
People know there is very little likelihood they'll get caught and they know that not much will happen to most of them in the unlikely event that they do get caught. (or at least that's what they think.) And most are young people when they start fooling around with it, young people who feel invincible anyway. Even if they are idiots likely to get caught they don't know that. They know hardly anyone ever gets caught and they think it won't happen to them either.
I truly don't believe that there are many who don't smoke pot just because it is illegal. It's relatively cheap on a per use basis and easily available anywhere. We could hardly make it more available if we tried. It's not that people can't afford it or they can't find it, it's that they don't want to do it. And I think what makes most not want to do it are mostly all the good reasons not to do it that have nothing to do with its legal status. And those few who really want to do it but won't just because it's illegal, they wouldn't be much of a problem for us if we did legalize it. They've already shown that they have some self control by not doing something they really want to do and they've already shown that they are basically law abiding people.
We are stopping precious few people from smoking pot with our laws. What we are doing is wasting an absolute fortune trying to keep up the ban on marijuana. We're causing a rift between law enforcement and a significantly portion of our society. We're causing a situation we're millions of people regularly break the law thus eroding respect for the rule of law in general. We're enriching organized crime to the tune of many billions of dollars a year. Most of what Mexican drug trafficking organizations make is coming from marijuana sales. We're really accomplishing nothing good but we are causing problems too numerous to list. I understand your objections to pot smoking, but it makes no sense to me to have an unenforceable law that is causing way more harm than good.
How about drilling off Santa-Barba, Reducing Gov't Spending, and cutting all aid to Illegals so that they leave?
Instead, embark in another culturally destructive government sponsored paradigm changer which will spread throughout the country and turn us all into the $&!+hole that Kalipornia has become....
I think not....
Apparently you cannot back up what you said about The Netherlands.
I don’t drink and anyone that smokes marijuana belongs in prison!!!!!
even cancer patients that use it to help them have an appetite and to help suppress their pain?
Let's legalize prostitution, any and all drugs, why not remove all laws that don't involve bodily or economic harm to another person from the perp. The truth is, no one can assure anyone that smoking pot is truly without a victim. We are busy banning smoking tobacco decades after being told it was a victimless pursuit, when in reality, it is not. We all pay escalated health costs associated with lung cancer born from smoking tobacco. And now we find cancer-causing secondhand smoke effects innocents. Marijuana is exempt from harming the lungs? Sure it is, LOL. All this effort to legalize it should ensure positive progression in all societies, right? The ugly truth is that societies that turn their backs on drug use are well below the standard of living level that I or my family want to live in or ever dream to achieve.
The will of the majority should prevail, and those who want to smoke it should move to states whose laws are lax, like mine. We are already at the bottom of the economic ladder having been mismanaged by a corrupt, one-party government, we can't afford to prosecute the lawbreakers, are losing population yearly, so we are busy loosening our laws, trying to attract potheads, as we think they will add substantially to the gene and economic pool. I hear CA is in a similar predicament.