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Comment by at-fates-hands | Hacker News Reader

Just to play devils advocate here:

It sounds great, except for the fact there's a kind of product gentrification going on.

http://www.thecannabist.co/2014/07/30/colorado-marijuana-bla...

"In this light, taxation is seen as a blunt instrument of exclusion, driving precisely the groups most prosecuted in the war on drug further into the arms of the black market where they remain at risk for arrest or robbery. In one Denver dispensary, a $30 purchase of one-eighth of the Trinity strain of cannabis includes $7.38 in state and local taxes — a near 33 percent rate. As Larisa Bolivar, one of the city’s most well-known proponents of decriminalizing marijuana nationally and opening a true free market, puts it: That seven bucks buys someone lunch.

“It’s simple,” she says. “A high tax rate drives black market growth. It’s an incentive for risky behavior.”"

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> “It’s simple,” she says. “A high tax rate drives black market growth. It’s an incentive for risky behavior.”"

I disagree, as a smoker , I'd prefer buying the legit stuff somewhere safe rather than going into a dangerous neighbourhood to get a 33 percent rebate on a product with questionable quality. the premium is worth paying for my safety. And at least i'm not financing some gangs that will later be raiding my house or mugging my friends. I just want to get my shit legally. How many adults buy their booze illegaly today? none.

I'm guessing that $7 isn't a big deal to you, and that you don't ever chose between legal drugs, or food and illegal drugs. The person you're quoting is specifically talking about poor people. Allowing those people to grow and sell cannabis, rather than forcing them to buy it from expensive state shops, would probably be a good thing all round. It might help reduce the amazing levels of violence in Mexico.

> How many adults buy their booze illegaly today? none.

What do you mean? "How many people make, sell or buy 'moonshine'?" - probably very very few people. (a quick search shows this: http://abcnews.go.com/US/story?id=91768)

But if you mean "How many people are arrested for buying alcohol in one country (or state) and transporting it across a border?" - well, I don't know but searches turn up results to show that it does happen. http://www2.potsdam.edu/alcohol/InTheNews/Etc/1077647092.htm... http://www2.potsdam.edu/alcohol/InTheNews/Etc/20070112112826... etc etc

I'm guessing that more people are arrested for illegal spirits in Alabama ($18.23 tax per gallon) than in Colorado ($2.28 tax per gallon) http://taxfoundation.org/article/state-sales-gasoline-cigare...

Honest question: in tobacco growing regions, people would be able to grow tobacco plants in their backyards and thus be able to produce "moonshine tobacco", bypassing the high taxation of tobacco. Is this a thing? I've only ever seen commercially produced tobacco smuggled from a lower tax jurisdiction, but I live far from tobacco growing regions.

That is an interesting question. A quick search shows a few websites saying that it's legal (in the US) and trying to sell seeds for tobacco.

I guess it's only when you start distributing the product that people get involved.

Isn't it similar to fry-oil? If the owner pays for it to be disposed of that's one thing, but if the owner sells it off for someone to use in their car then someone wants tax?

Presumably, the legal product will drive down the price of black market product. If the only reason to buy it illegally is price, then there better be a significant discount.

Putting pressure on the dealers could lead to nasty shit happening (diversification into other products and services, or hostile competition) in the mid term.

> If the only reason to buy it illegally is price, then there better be a significant discount.

Yes, in the GP quote the discount is 30%.

> Putting pressure on the dealers could lead to nasty shit happening (diversification into other products and services, or hostile competition) in the mid term.

Yes. This was a problem with limited decriminalisation experiments with parts of London (UK) - criminal gangs flooded regions where cannabis was decriminalised; and the rest of the chain of production and distribution was still illegal so minor decriminalisation did not stop people being trafficked into the UK and forced to grow cannabis.

>How many adults buy their booze illegaly today? none

What about adults between the ages of 18 and 21?

18 to 21 year olds are likely to pay far more than market prices. They are not likely to purchase homemade liquor when getting an adult to buy for you is trivial.

>How many adults buy their booze illegaly today? none

Its a lot more than none. You can't buy good traditional local corn whiskey legally, and quite a premium is paid.

The black market isn't all stabbings ... certainly in CA, it isn't. I make good money and I wouldn't think twice about going to the black market for my medicine if they had crazy tax like that here. I mean, I (and many other people) already won't shop at places that don't roll sales tax into their prices.

Do you buy your alcohol on the black market?

Once the legal market for marijuana matures, why should it be any different?

Alcohol isn't my fucking medicine, alcohol is a lot cheaper, I seldom buy alcohol, there is no black market for alcohol because alcohol is a lot cheaper, the means of producing cannabis and alcohol differ starkly, alcohol abuse can have serious health effects, ..

What a lazy hypothetical. And very disrespectful.

Bootleggers in the old American cities didn't suddenly stop serving their clients after prohibition ended either. Legalisation is very new and there aren't enough dispensaries to bring the price down. The article itself mentions :

  As more legal recreational dispensaries and growers enter the market, the market 
  will do what it does with greater competition: adjust. Prices will fall. 
  The illegal market will shrink accordingly.

OK, I was just in WA, and let me assure you WA is where the black market will continue to thrive. The CO market is taxed, but is actually cheaper than the black market in CA from what I hear.

WA, however, has a state tax, county tax, city tax, and thus, prices are double that of the black market. Plus, the state really clamped down on growing permits, so there are now shortages driving prices up higher. WA and CO will show very clearly how to do this right (CO) and how to do it wrong (WA)

It's too early to tell. They only just started issuing retail licenses this past month. It's slow going because each store has to meet stringent standards. But they're opening one by one.

The taxes are applied at a rate of 25% at each level of the system: growers, processors, and retailers. The remainder are standard business taxes (B&O tax) and sales tax.

From what I've seen, everyone involved has been very conscientious in implementing this law and have made adjustments to ensure that it works. If the black market continues to thrive due to taxation that is too burdensome, I expect they will adjust accordingly.

The black market here in Washington will absolutely thrive because the Washington Liquor Control Board screwed up: http://slog.thestranger.com/slog/archives/2014/07/08/how-was...

The tl;dr:

* Not enough pot: You'll never believe the name of the consulting firm hired by the state to estimate how much pot we’ll need. It’s a company called BOTEC, short for—no shit—“Back of the Envelope Calculation”

* Too few pot shops: Seattle is slated to get just 21 cannabis stores. This seemingly-arbitrary allotment is far fewer than the hundreds of dispensaries already serving medical marijuana patients only, and City Attorney Pete Holmes has repeatedly asked the liquor board to increase this number.

* Not even the state is clear on where stores are allowed: Can I open a pot business here?...But the state apparently sometimes can’t—or won’t—answer that question.

Also, I should mention that the first and last time I bought pot was when I was 15 and living in Minnesota. I might buy pot at some point, but I only smoke very rarely, and it sounds like a huge hassle at the moment. That said, were I to buy, it would be from a state-regulated store.

My news is a bit delayed, but from what I know of WA, the political atmosphere is a bit frayed. Local government is hampered by a complex web of bureaucracy and the state government may not be willing to play along.

I'm sure there are plenty of people there that want to follow the same example, but they may not have enough momentum to organize and push through as CO did.

On the other hand, it's now a source of tax revenue, and governments can generally be counted on to find the balance to maximize tax revenue.

Not just not enough shops, but not enough product to meet demand. Supposedly the legal growers weren't nearly ready for the explosion in demand on this year's crop.

There is an ongoing conversation here about the tax rate. I think that as we get more comfortable with legalization, the tax rate will actually go down as I think the state is leaving revenue on the table right now.

I think the more interesting question is the future of medical marijuana in Colorado. Right now it's a giant loophole that effectively gets you around those higher taxes. I know many folks who have kept their MMJ cards, there remains nothing actually medically wrong with them.

Cigarettes are highly taxed and there doesn't seem too be much of a black market for them.

Edit: Looks like I was wrong, but the black market is buying legal cigarettes and driving them across state lines which is a bit different from growing your own tobacco.

There certainly is a black market for cigarettes.

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/25/w...

http://nypost.com/2014/08/02/cop-who-used-deadly-chokehold-s...

Loosie seller killed by NYPD.

Probably because there's no nearby place to get untaxed cigarettes, and there's not enough profit in growing tobacco and making cigarettes from scratch.

When I was in high school, back in the early '90s, the difference in taxes on cigarettes between Ontario and New York was a few dollars a pack - enough to cause a huge black market in smuggled cross-border cigarettes. I didn't buy a legal pack in four years.

Now, amusingly, taxes in New York have been raised so much that they're the target of smugglers. (And in Ontario, the Indian reservations that used to do all the smuggling got into the direct manufacturing business, since they can sell on the reservation tax-free.)

http://www.washingtonpost.com/blogs/govbeat/wp/2014/03/20/ho...

There is a black market for cigarettes (to skirt local and state taxes) but I doubt it leads to any significant risk for end-users.

There's definitely counterfeiting of cigarettes too, and obviously the safety of unregulated, falsely-labelled black-market counterfeits is not assured.

That's funny, because the safety of regulated, arguably truthfully-labeled mainstream brands cannot be assured, either.

This is naturally true; however, there is at least no rat poison in them.

http://en.wikipedia.org/wiki/Poospatuck_Reservation

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