JONATHAN TURLEY 11/25/2022
It appears that illegal pot growers are giving thanks this holiday for California lawmakers who legalized pot only to fuel demand for illegal cannabis due to massive taxes. It is the same problem that I wrote about in New York’s program in an earlier Wall Street Journal column. Politicians continue to pile on taxes as if they have no impact on pricing and demand. It just seems like free money if you ignore every economic metric and principle. Even with a recent recognition that they have killed their own market, California lawmakers are being criticized for offering too little too late in terms of tax relief.
Sgt. James Roy of the Riverside County Sheriff’s Department is quoted in Fox News as saying that “The illegal industry is competing with the legal industry and essentially putting them out of business.”
Despite being a relatively new industry, state and city officials imposed thick layers of regulations, charges, and taxes on the budding businesses. Some estimates put the taxes at 70 percent of current costs.
Even with a recent recognition that lawmakers strangled the industry, a temporary tax cut is not expected to be enough to make lawful businesses competitive. There remain a host of other taxes, required regulatory obligations, and even bars on claiming certain expenses used by other businesses. The result, according to one study, is that “the effective tax rate on marijuana in California ranges from $42 to $92 per ounce, depending on the jurisdiction, compared to an estimated wholesale production cost of $35 per ounce.”
More:
https://jonathanturley.org/2022/11/25/reefer-madness-demand-for-illegal-pot-soars-in-california-due-to-high-taxes/