Why legal marijuana taxes will reward illegal drug dealers

Marijuana advocates have argued for years if marijuana was made legal then illegal drug dealers will go out of business. However, that may not be the case in California. Not because people prefer to buy marijuana illegally, but because the city, county, and state taxes will be exceptionally high.

California growers and users will pay dearly for their pot

California will begin selling recreational marijuana on January 1, 2018.

According to CNN, the taxation will be well above the current state sales tax of 7.25%. Depending on the city and county where the consumer purchases marijuana, the tax could reach up to 33.50%. That means for every dollar spent on pot, the consumer would actually pay about $1.34.

Marijuana farmers will have their own set of taxes and fees to pay. A California grower will have to pay upwards of $100,000 in taxes and fees to properly be licensed and approved in order to begin growing. In addition to their regular taxes, they will also have to pay $9.25 an ounce for marijuana flower and $2.75 an ounce on leaves.

So much for buying reasonably priced marijuana from a safe location.

California’s taxes are high but not as high as this state

While California will have high taxes they won’t come close to the taxes in Washington. Currently, Washington’s tax rate for retail marijuana sales is around 50%. Colorado, Nevada, and Oregon have rates ranging from 20% to 36%. Maine hasn’t announced its tax structure, and Massachusetts says they will tax marijuana at around 24%.

Who benefits from the high taxes?

It’s not likely the high taxes will have much of an effect on retail sales. Chances are many people will shop close to where they live and not venture to cities or counties with lower marijuana taxes.While ‘growing your own’ is an option, many people won’t do it because they don’t have the time, expertise, or commitment to growing and harvesting marijuana.

However, many people will respond to lower prices from non-legal sellers. In the case of California, an ounce of illegally sold marijuana could be up to 38% less than legally sold marijuana.So, the two big winners from the taxes will be the state coffers and illegal merchants (a.k.a. ‘drug dealers’).

LA Times reported the marijuana taxes will give the price advantage to the black market since they won’t pay any of the taxes or fees.Also, with the relaxed marijuana laws in the state, illegal sales won’t be much of a deterrent to illegal dealers.