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Taxed Legal Pot More Expensive than Untaxed Illegal Pot

Posted By Daniel Greenfield On January 3, 2014 @ 12:48 pm In The Point | 9 Comments

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.

 


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