CO's Dope Taxes Up in Smoke?

[GodFearinGunTotin]

I wouldn't call it 'another' black market. The more it is taxed and regulated, the more black market activity we will see. This is just economics.



That's just plain fraud, not really a black market. But the black market component is based on regulations against fraud.

But that's what the supporters are clamoring for when they state those as reasons to do it, they're just asking for, a black market.

 

[steveh_131]

But that's what the supporters are clamoring for when they state those as reasons to do it, they're just asking for, a black market.

Man of the supporters, yes. I've vocally disagreed with the 'legalize, regulate and tax the **** out of it' crowd.

It should be treated like any other agricultural commodity by regulators.

 

[T.Lex]

That's just plain fraud, not really a black market. But the black market component is based on regulations against fraud.

So should we not have anti-fraud regulations? Or do we accept that a certain level of black market will always exist alongside a reality-based free market?

Full disclosure, I'm the great-grandson of a Pennsylvania moonshiner.

 

[steveh_131]

So should we not have anti-fraud regulations? Or do we accept that a certain level of black market will always exist alongside a reality-based free market?

We certainly should have anti-fraud laws. But we do need to be aware that regulations breed black markets.

Also, fraudulent transactions have no place in a free market. Don't mistake anarchy for a free market.

 

[churchmouse]

To most of us a "Black Market" is anything done regularly under the table.

An under the radar supply line is in my eyes a black market.

 

[T.Lex]

We certainly should have anti-fraud laws. But we do need to be aware that regulations breed black markets.

Also, fraudulent transactions have no place in a free market. Don't mistake anarchy for a free market.

Agreed.

And this is an issue I have with benevolent anarchists and is also a sort of free market democracy paradox. Government is a necessity, because groups of humans are incapable, over time, of treating each other fairly. But, government is by its nature a distortion of the market. Such market distortions breed black/gray markets.

Personally, I can accept a low level of black/gray market in society.

But, as it relates to the point of this thread, IMO it is Ludacrisian* to think that .gov can legalize something, tax it, and eliminate the black market.


*I have no idea what economic philosophy Ludacris espouses, but word of mouf says he is Keynesian. I just saw the opportunity for a pun.

 

[Timjoebillybob]

So the call for the legalize it, tax it, and regulate it many folks call for for marijuana is just another black market kick starter (or perpetuater)?

Nope. A black market limiter for the one that already exists. Consider alcohol for example, it was banned (with a few exceptions), then legalized, taxed and regulated. Did it end the black market? Nope, moonshiners still exist to this day. Did it limit it? Heck yeah.

But that's what the supporters are clamoring for when they state those as reasons to do it, they're just asking for, a black market.

Nope, see above.

To most of us a "Black Market" is anything done regularly under the table.

An under the radar supply line is in my eyes a black market.

I will agree to a degree.

 

[steveh_131]

And this is an issue I have with benevolent anarchists and is also a sort of free market democracy paradox. Government is a necessity, because groups of humans are incapable, over time, of treating each other fairly. But, government is by its nature a distortion of the market. Such market distortions breed black/gray markets.

Protecting property rights and contract law is essential to a free market, not a distortion of one.

But, as it relates to the point of this thread, IMO it is Ludacrisian* to think that .gov can legalize something, tax it, and eliminate the black market.

Complete elimination may not be possible, but we can get pretty darn close. When is the last time you heard of someone being killed in an underground field corn transaction?

 

[rambone]

To most of us a "Black Market" is anything done regularly under the table.

An under the radar supply line is in my eyes a black market.

In a free market there is no table; there is no radar. Private transactions are nobody else's business.

 

[churchmouse]

In a free market there is no table; there is no radar. Private transactions are nobody else's business.

In a "True" free market. This would not be burdened with leeches and parasites.

In our system this applies.

 

[T.Lex]

Protecting property rights and contract law is essential to a free market, not a distortion of one.

Agree, but gov'ts cost money, which means taxes, which means market distortion.

Complete elimination may not be possible, but we can get pretty darn close. When is the last time you heard of someone being killed in an underground field corn transaction?

Truly, I lol'd. Rep'd.

Part of the reason that the alcohol thing works is that the cost of production is lower for Big Alcohol (by volume) than moonshiners. It is more expensive for people to make their own than to buy it legally. (It has been awhile since I looked at home brew, so that may not be totally true in small volumes, but I believe it is still true in large volume.)

With MJ, it appears that the cost of production is nearly the same. Or cheaper if you import it. So, the tax is effectively a premium in a market that has typically looks for the best deal. Quality is not necessarily a differentiator. In fact, the illicit providers may charge a separate premium for lacing the stuff with crap to make it "better" that the legal places can't touch.

That's a bit of a TL;DR way around to say that I don't see a scenario where there is a significant reduction in the illicit trade. Let's call that a point where the illicit trade is less than 10% of the legal variety.

 

[Timjoebillybob]

Agree, but gov'ts cost money, which means taxes, which means market distortion.


Truly, I lol'd. Rep'd.

Part of the reason that the alcohol thing works is that the cost of production is lower for Big Alcohol (by volume) than moonshiners. It is more expensive for people to make their own than to buy it legally. (It has been awhile since I looked at home brew, so that may not be totally true in small volumes, but I believe it is still true in large volume.)

With MJ, it appears that the cost of production is nearly the same. Or cheaper if you import it. So, the tax is effectively a premium in a market that has typically looks for the best deal. Quality is not necessarily a differentiator. In fact, the illicit providers may charge a separate premium for lacing the stuff with crap to make it "better" that the legal places can't touch.

That's a bit of a TL;DR way around to say that I don't see a scenario where there is a significant reduction in the illicit trade. Let's call that a point where the illicit trade is less than 10% of the legal variety.

How often do you hear of someone being killed in moonshining? Compared to let's say the 20-30s? Small scale I produced about 5.5 gallons of peach wine with a ABV of about 20 (close to 40 proof) it cost me about $12. I could have distilliled it down to make 2+ gallons of "peach schnapps" for maybe another 5 after cost of equipment. So 2 gallons of peach schnapps for $17. Well under half the cost of commercial. You also have to figure in the "cost" of having to do it under the table so to speak. You can't just generally set up a pole barn in your backyard and go to work, most of the moonshiners have to go to relatively extreme measures to keep it hidden, then distribution costs, then.....

Yes economies of scale does factor in, how much is corn by the bushel per lb, compared to by the train car(or 100 car train which is most likely). But then you have to factor in overhead, such as CEO, CFO, CLO, CPO and all the various HR and QC, and other management positions. I'm going to go out on a limb and just guess it almost washes out in the end with perhaps a very small edge to the small producer.

 

[T.Lex]

I'm going to go out on a limb and just guess it almost washes out in the end with perhaps a very small edge to the small producer.

I'll accept your description, partly because it helps my position.* If it is a net zero, there's no financial incentive to continue the illegal (not counting homebrew hobbyists who do not sell for profit) and dangerous production.

ETA: with MJ, I'm not convinced you can ever get those same economies of scale. Homegrow will always be cheaper.


*Also, when you get into alcohol distribution there are REALLY crazy market distortions and gov't endorsed monopolies, etc. Not worth getting into.

 

[GodFearinGunTotin]

I'll accept your description, partly because it helps my position.* If it is a net zero, there's no financial incentive to continue the illegal (not counting homebrew hobbyists who do not sell for profit) and dangerous production.

ETA: with MJ, I'm not convinced you can ever get those same economies of scale. Homegrow will always be cheaper.


*Also, when you get into alcohol distribution there are REALLY crazy market distortions and gov't endorsed monopolies, etc. Not worth getting into.

Can you even buy tobacco seed? If you could, I'd bet a black market would explode for tobacco. I don't recall ever hearing anybody talk about growing their own tobacco.

 

[steveh_131]

With MJ, it appears that the cost of production is nearly the same. Or cheaper if you import it.

Do you have a source for this?

I know next to nothing about growing marijuana, but I don't believe for a moment that a farmer with a 100 acre field full of it couldn't produce it cheaper than a guy in his basement who's limited to X number of plants.

 

[Timjoebillybob]

I'll accept your description, partly because it helps my position.* If it is a net zero, there's no financial incentive to continue the illegal (not counting homebrew hobbyists who do not sell for profit) and dangerous production.

ETA: with MJ, I'm not convinced you can ever get those same economies of scale. Homegrow will always be cheaper.


*Also, when you get into alcohol distribution there are REALLY crazy market distortions and gov't endorsed monopolies, etc. Not worth getting into.

Thank you for accepting it, because it doesn't really help your position. An illegal producer is artificially limited in scale. Now while I just by myself could theoretically produce 10 gallons of peach schnapps a month and keep it quiet, I couldn't necessarily do it with 100 gallons (and I have never distilled alcohol). Which limits my quantity of scale. During prohibition they tracked sales of corn and sugar, bought too much and you were checked out. Not quite as bad as let's say sudafed today(and don't get me started on that please), but close.

Can you even buy tobacco seed? If you could, I'd bet a black market would explode for tobacco. I don't recall ever hearing anybody talk about growing their own tobacco.

Yes you can, or at least the plants. One member here mentioned trying to grow some this year. But most people who use plain tobacco for cigarettes buy "pipe tobacco" which has a much much lower tax schedule.

Do you have a source for this?

I know next to nothing about growing marijuana, but I don't believe for a moment that a farmer with a 100 acre field full of it couldn't produce it cheaper than a guy in his basement who's limited to X number of plants.

I don't know much about it either, but the difference between indoor grow and out door grow per plant production is measured in pounds, not ounces. In favor of the outdoor grow. Think 2-5 oz per plant indoor to 2-5 lbs per plant outdoor. I've never grown, and never intend to. But I've known and talked to people that have. But you also have a quality difference, with the benifit going to indoor. So....

 

[GodFearinGunTotin]

Yes you can, or at least the plants. One member here mentioned trying to grow some this year. But most people who use plain tobacco for cigarettes buy "pipe tobacco" which has a much much lower tax schedule.

After a quick perusal, yes you can buy tobacco seeds and it doesn't sound like it's all that hard to grow. (I didn't read far enough to see what's required to make quality, usable tobacco for smoking or chewing, etc.) The one site I looked at alluded to the fact it was legal to grow but not sell.

 

[steveh_131]

I don't know much about it either, but the difference between indoor grow and out door grow per plant production is measured in pounds, not ounces. In favor of the outdoor grow. Think 2-5 oz per plant indoor to 2-5 lbs per plant outdoor. I've never grown, and never intend to. But I've known and talked to people that have. But you also have a quality difference, with the benifit going to indoor. So....

I didn't realize the difference was that big. So my point remains that treating it like any other agricultural commodity would result in so much cheap marijuana that the black market would effectively disappear.

 

[Timjoebillybob]

After a quick perusal, yes you can buy tobacco seeds and it doesn't sound like it's all that hard to grow. (I didn't read far enough to see what's required to make quality, usable tobacco for smoking or chewing, etc.) The one site I looked at alluded to the fact it was legal to grow but not sell.

From my limited understanding curing isn't the easiest thing but doable for the home enthusiest. And yes it's legal to sell.... Provided you get all the required federal and state permits, pay all the taxes, and such. Again from my very limited understanding it makes the ATF look almost logical....

I didn't realize the difference was that big. So my point remains that treating it like any other agricultural commodity would result in so much cheap marijuana that the black market would effectively disappear.

The quality issue does remain, along with the labor required. From my understanding one male plant can ruin the output of several hundred female plants. And the plants can change sex, ala Bruce Jenner... But without the surgery. They need almost daily monitoring of each plant. So while the production would be much higher in open field cultivation, the quality would probably be lower along with higher labor costs. Still factoring all of that, yes open field is much more productive and profitable. Which is why there are several acre grow farms in CA busted every year.

ETA Once again this is nothing I have ever done, nor intend to do. This is all knowledge I know from second hand sources.

 

[Dosproduction]

who cares taxes are evil. The less we pay the better.