Taxed Legal Pot More Expensive than Untaxed Illegal Pot

Legalize Weed uncle sam

This shouldn’t be too much of a surprise. Legal cigarettes are much more expensive than illegal cigarettes.

Advocates for drug legalization have argued that people would choose to buy drugs if they were legalized, cutting off the drug dealers. But as it turns out, the street price for drug dealers is cheaper than the legalized price because drug dealers don’t need to buy licenses, insurance and jump through all the hoops that it takes to run a business. Especially a business selling a controversial highly regulated product.

And that gets passed along in the markup.

The high times in Colorado are coming with high costs for cannabis consumers.

Hemp hunters who waited for hours early Wednesday to be among the first to legally purchase marijuana from state retailers found sticker shock at cash registers.

On the first day of legal weed sales, Gillette said she found retailers selling top-shelf marijuana to recreational users at prices close to $400 per ounce, not including taxes.

The state does not impose any pricing structure for pot purveyors, leaving the market open to  supply and demand. One dispensary was selling high-quality marijuana on Wednesday at $70 for one-eighth of an ounce — a markup from $25 for the same amount the day before, according to The Associated Press.

This is what happens when a product goes legal…

Prices were also increased by the new 25 percent tax — 15 percent excise and 10 percent sales — on all marijuana purchases in the state that voters approved in November, along with any other local jurisdictional taxes on top of that. Marijuana sales are expected to generate nearly $70 million in tax revenue for Colorado in 2014.

That’s a 25 percent tax on top of whatever the cost of doing business already is. So legalizing an illegal product just makes it more expensive.

The Socialist solution would be to blame the businesses for raising prices and nationalize sales of pot through the government. But the government has lost money running gambling operations and selling liquor. There’s little doubt it could manage to lose money selling drugs.


  • UCSPanther

    Up in Canada, cigarettes and other tobacco is taxed to the hilt, and they have a lot of trouble with black market cigarettes which are often smuggled in through “Indian” reserves on the border.

    Once the original euphoria of Marijuana legalization wears off, you’ll see the black market for dope still standing and making a profit like it always has.

  • truebearing

    The Left opposed “the war on drugs” because, according to them, it unfairly targets those who are trafficking the most, the Left’s minority constituency, but once they realize that these opportunists are hurting the revolution, they’ll be throwing drug dealers in prison by the thousands and throwing away the key. The drug dealers will yearn for the good old days once the Left starts punishing them for proving that even with a monopoly, big government can’t deal drugs competitively.

  • Smoking Hamster

    As a stanch opponent to marijuana, I support the full socialist management of pot. Collective pot farms and the like.

    No better way to ensure shortages and reduction in consumption.

  • Eric Blake

    I worked at a convenience store in Reno and business owners from California would come to us and buy cartons of cigarettes at RETAIL then take them back to CA and sell them in their stores. They still made more profit than if they bought their cigs locally. Wouldn’t surprise me if smuggling weed into Colorado increased because of the taxes and high prices

  • Aaron Wolf

    Seems to me people should only buy pot while they wait for their own plants to mature.

  • Veracious_one

    what does legalized pot do for those perspective employees whose perspective job application requires drug screening? will drug screening no longer be required?

    • Daniel Greenfield

      It’ll be ruled illegal, like using criminal records, under disparate outcome.

    • Jen

      Just because it’s legal, doesn’t mean they can’t screen for it. As a condition of employment some employers require new hires to have a degree, read English, or whatever. It’s still a free country and employers have a right to ensure their employees are clear headed.

  • bilsome

    How stupid of the legislature.The stuff is called weed for a reason:almost anyone can grow it in his back-yard.

  • Narc

    black market is never going away if they approach the problem like its just any other consumer good. The taxes should start low and gradually increase once a proper system is in place.You’d better believe that people are still buying weed from home producers in Colorado still because those prices are just insane.